Endowment shortfall

rox0258

You could apply to convert a sum equal to at least 19k to capital and interest repayment over the remaining term (and/or request a term extension to assist with repayment affordability), and/or simply start saving to prepare of the day.

SandC

rossclivejamesronald wrote: »

Holly,
Thanks again for all your advice, you certainly seem an expert on the subject!
Gonverting to a repayment mortgage appears to be the answer but as there's only 3 years left
i don't think i could afford the payments as i would not want to extend the duration.
thanks,
clive.

Find out from Standard Life how much you would get if you cashed in now, then use all that money to pay off a chunk of your mortgage. We're not suggesting you just switch to repayment with the full £48k. You have to do something, so at least look into this option. There may be more funds available than you realise to reduce your overall debt.

When you do find the surrender value though, do ask on the savings and investments board here, or better still get yourself an IFA, to find out if the policy is one which you can sell on and potentially get a little more for.

Froggitt

rossclivejamesronald wrote: »

With regard to ignoring letters and not doing anything about it i am not in any position to increase my repayments
to camouflage the poor performance of my policy.

If not, then your only option is to sell up and move somewhere smaller. If you dont, you will end up owing the building society money for ever than will only get bigger.

holly_hobby

SandC wrote: »

Find out from Standard Life how much you would get if you cashed in now, then use all that money to pay off a chunk of your mortgage. We're not suggesting you just switch to repayment with the full £48. You have to do something, so at least look into this option. There may be more funds available than you realise to reduce your overall debt.

When you do find the surrender value though, do ask on the savings and investments board here, or better still get yourself an IFA, to find out if the policy is one which you can sell on and potentially get a little more for.

The TEP market is flat to no existant, and early surrender needs to be balanced by any potential loss of a TB, loss of life cover - against the total premiums payable till maturity (assuming WP contract).

As I have previously advised, Clive needs to firstly establish if there is a MP with the policy, if so for how much.

To consider if he wants to retain the policy, and either effect a sep savings vehicle i.e ISA to commence provision, and/or establish how much it would cost for him to convert at least 19k (of in worst case what is affordable) to C&I over the remaining term (seeking an extension if status and lender permits to assist with costings). Or to crystalise his position, surrender the policy, and change the remainder to C&I and/or additional savings vehicle.

These are the only solutions to the OP, other than to sell the property upon the occurance of an unmanageable shortfall at maturity.

Sorry Clive !

Hope this helps

Holly

Bigsmak

I used to work for Scottish life and in the year 2000 we sent out the letters to everyone telling them that based on the now standard prediction levels of 4% 6% and 8% their was a chance that there would be a shortfall with their endowment.

EVERY provider had to do it in the year 2000.

Here is how it works, you pay money in, it is invested for you and grows. The reason there is a shortfall is that in the 80s and even the 90s people projected growth levels of 12% and sometimes up to 18%. At the moment people are biting my hand off to get 7% per annum.

So, you invested and it never made as much as you thought it would. But you were first told about this 12 years ago and you probably ignored the letters then.,

SECOND POINT that I wish to make.

You were on an interest only mortgage, when you took it out you were probably paying a lot more than you are now. This is because interest rates dropped. Now the interest rates and how the stockmarket performs are usually related. If one drops the other does and vice versa. So you saved money on your interest payments but with hindsight you should have put that money you saved into the endowment. It might not have solved it but it would have helped a lot.

Questions for you

How much have you been paying into your endowment monthly and for how long?
How much will will you have paid in total at the end?
How much are you expecting to get out of it (according to the latest projections) ???

---

OK - ways to sort this out.

1. Pay it out of your saving if you have them
2. Extend the mortgage for several more years to give you time to pay it off
3. Well.. I don't know your circumstances, so perhaps go and see an IFA or a good Mortgage broker to help solve this.