Help with confusion about shortfall on endowment mortgage

kezzaba

Hi

I have an endowment policy with Pearl on my mortgage that matures in 2019. I have been paying since 2001 and receiving every year a red alert letter showing high risk of a shortfall. The target amount is 29,500.00

However when I first received a red alert letter some 5 years ago I over a number of months overpaid into my mortgage account. My mortgage is made up of two halves - 1 - repayment and 1 half endowment.

According to my mortgage account the endowment part of my mortgage now has a closing balance of 22514.94.

This is where my confusion lies. I am being told by Pearl that I am at risk of shortfall and yet my mortgage balance shows I am now no longer at risk.

Am I missing something or am I not understanding how these things work properly?

Kerry

dunstonh

Pearl wouldnt know that you have your mortgage split on interest only basis and repayment. They have an endowment policy with a target amount of £29,500 that is falling short of that target. The fact you dont need that target amount as your interest only mortgage is £22,514 is not known to them (and not required to be).

kezzaba

Arrr that makes sense! Thank you

Do I need to tell them?

Kerry

dunstonh

You dont need to tell them. The two things are not linked. Effectively you have a product target of £29,500 falling short. Even if you didnt have the mortgage any more it would still be falling short of that target.