Endowment due to expire, help needed

Garfield85

Any help would be much appreciated with the following.

My future inlaws have an endowment policy on their house that is due to expire in 3 years. It is expected that there will be a shortfall of £20k that they will have to find to cover the original fee.

The original price was £57k and the property is now valued at £230k. It is likely then that in 3 years, their endowment will be worth £37k, leaving them with £20k to find.

Immediately we suggested remortgaging as they are only just 50 years old, and will have significant equity. If my sums are correct, a £20k mortgage on the £230k house is roughly a 10% mortgage.

The problem the inlaws think they have is that Father inlaw has high blood pressure, which they think will rule them out of attaining a mortgage. They have also said they have no life assurance due to this health issue.

Can this really stop them from getting a mortgage to cover the shortfall?

Any ideas would be very welcome.

Thanks in advance

G

powerwin

Have you read the below yet?

http://www.moneysavingexpert.com/reclaim/endowments-miss-sold

Rgds

Thrugelmir

Garfield85 wrote: »

The problem the inlaws think they have is that Father inlaw has high blood pressure, which they think will rule them out of attaining a mortgage.

A medical condition in itself is not an issue when obtaining a mortgage.

Suggest that overpayments are made immediately to reduce the mortgage debt. There's no need to remortgage at the current time.

noh

The figures don't really add up.
If they paid £57k for the house originally it is unlikely that they had a 100% mortgage so their original loan would not have been £57k as you suggest therefore the shortfall will be less.

They need to find out what the true situation is and plan from there.
As suggested already there is no reason why they should not get another mortgage provided their income is sufficient.
As suggested by Thrugelmir overpayments are the way to go.

Annisele

Lenders generally don't require you to have life assurance as a condition of the loan. (Some lenders used to, but not any more).

High blood pressure would have to be pretty high to make somebody completely uninsurable - if your parents in law actually want life cover, they should speak to a broker. However, given the size of the loan, it may be that they don't actually need life cover at all.

PasturesNew

Could they start trying to pay down that £20k now, then see where they're at in 3 years' time? If they paid off £500/month it might be enough.

Garfield85

Thanks for all your responses.

To be honest, I havn't got any more clear info as it seems a touchy subject for them to discuss with us - but you're spot on that they need to be completely clear with what their situation is.

It sounds like it should be possible for them to remortgage closer to the time, depending on income, which I believe is sufficient.

Im not sure if they are overpaying at the moment or if they can even afford to - but that is definately something we will suggest.

Thanks

maninthestreet

Surely your future in-laws can't have only just noticed that the endowment is not going to be able to pay off the mortgage?

dunstonh

Most lenders will allow you to extend the shortfall amount and convert it to repayment basis if you haven't made plans to cover any shortfall.