endowment mortgage shortfall

privatebloggs

I get a war disability pension and disability living allowance. I have an endowment mortgage for which I get a housing allowance paid by the DSS. The mortgage term ends in a few weeks. The shortfall will be about £5k, can anyone tell me if I can still claim housing for the extra £5k shortfall lending I will need to borrow, or how to get some info on this subject.
thanks

dunstonh

You ask the mortgage lender to switch the £5k to repayment basis and extend the term. This is still a mortgage and therefore qualifies as such for any relevant benefits.

privatebloggs

many thanks for that info dunstonh, put my mind at rest, will call my building society tomorrow

silvercar

SMI (Support for mortgage interest) will only pay the interest on the loan, not the capital repayment.

The interest on 5k at 5% would be about £21 a month.

One way round it may be to extend the term of the whole mortgage, so that the benefit will pay the interest on all of it. Then put the proceeds of the endowment policy in the highest interest account you can find. Hopefully the interest you get on the endowment policy will go some way to repaying the outstanding 5k.

privatebloggs

Thank you for that advice silvercar, I will have a chat with the Nationwide to see what options are open to me, my income is modest so I think I will have to take whatever they offer me, so long as I don’t have to sell up to pay the shortfall, I shall be very relieved if I can stay in my dear ol hovel

privatebloggs

Hi guys, sorry for delay in updating you on my progress, just got out of hospital after heart surgery.

I went to see the Nationwide, they say they will extend the term of my mortgage for three years, interest only funded by an ISA, they also recommend I take out a mortgage term assurance with critical illness cover, and L+G contacted my GP.

since talking to the Nationwide, I had a massive heart attack, but thanks to the nice folks at the hospital, I’m still alive and kicking, anyone got any idea if this will affect my chances of extending my mortgage term and can I opt out of having my mortgage underwritten by this assurance policy, or get a relative to guarantor the extra £4k endowment shortfall

privatebloggs

only need £4k not £5k

TrickyDicky101

I am not an IFA so anything I say may well be short of the mark, but given your recent health problems I highly doubt that any life assurance product will be affordable for you (ie you are very high risk thus if anyone is even prepared to quote you a premium it will be massively inflated to take account and would probably come with a novella of exclusions). Can any family members lend you the money?

privatebloggs

No chance of family support, but an old friend has said she would take out a loan to lend me, but I don’t want to ask her if I can possibly avoid it, or indeed if she would qualify for such a loan. Just wondering if I could borrow the £4K as a secured loan over five years myself, without the need for life insurance or my health problems to become an issue

maninthestreet

You probably won't get a secured loan for £4k, as it's too small an amount - you're looking at an unsecured bank loan for £4K.

Thrugelmir

privatebloggs wrote: »

I went to see the Nationwide, they say they will extend the term of my mortgage for three years, interest only funded by an ISA,

What options did the Nationwide give you with regards to switching the mortgage onto a repayment basis?