Thank God I took a Repayment rather than an Endowment Mortgage!

cepheus

In 1991 when searching for a mortgage, I recall being given the hard sell on Endowments. No No No I said, but they kept plugging them.

Thank Goodness I stuck to my guns. I have never trusted anyone attempting to sell me a financial product ever since!

Throughout the Nineties, many policies paid out more than £100,000 to homeowners who had saved £50 a month for 25 years — some paid as much as £120,000. Now most pay less than £30,000 and some little more than £20,000.

The vast majority won't produce enough to pay off the mortgage they were supposed to cover. Homeowners have been forced to pay extra each month on their mortgages, divert savings from elsewhere or carry on working past their planned retirement date.

Aviva warns that only 2% of its 63,000 mortgage endowments maturing this year will reach their target. At Standard Life, 42,000 out of 44,000 policies will have a shortfall. Friends Provident warns 93% of policyholders can expect a shortfall, while at Axa Sun Life the figure is 71%.

With-profits endowments were sold alongside interest-only mortgages. Sales peaked between 1988 and 1992 — policies which will start maturing from now.

Homebuyers were promised their mortgage would be repaid and they'd get a tax-free lump sum on top. They were told their money would grow as guaranteed annual bonuses were added to their savings, and at the end of the policy's term they would get a large 'terminal' bonus

Read more: http://www.thisismoney.co.uk/mortgages-and-homes/endowments/article.html?in_article_id=522934&in_page_id=55#ixzz1EAB9ktCa

tanith

We did take out an endowment which would of had a shortfall but we were able to claim for mis-sold policy and got back a large cash amount happily, so for some it worked out ok but I know for many others it did not, we were lucky

shop-to-drop

Just as well those with mortgages about to expire will have plenty of equity. I should imagine that the mortgage outstanding will only be a fraction of the house value so not all bad. Obviously worse than if they had chosen a repayment mortgage but so much better off than those who bought at the top of the market.

Burridge60

This is Money is part of the Daily Mail, The Mail on Sunday & Metro Media Group

Read more: http://www.thisismoney.co.uk/mortgages-and-homes/endowments/article.html?in_article_id=522934&in_page_id=55#ixzz1EAGaXlJZ

And your point is? Journalists and especially Daily Mail journalists are right 250% of the time and when they weren't certain the Tories always came through. Now they hate the Coalition!

I seem to recall they advised NHS workers to leave the state backed scheme and take up Margaret Thatcher's freedoms for their pension.

In those days when interest rates were around 12 to 14% if someone said that your investment return would be sub 4% in the future would you think they were nuts!

lilac_rainbow

My oh took out an endowment policy but we took out a repayment mortgage. It's due to pay out next year so it'll be our overpayment for the year

Endowment shortfalls isn't new news anymore though