Endowment Shortfall over 50% - Please help!

HOski

I have posted this before but no- one replied and I really need advice. So I'm posting again in the hope someone will answer.

The most recent letter I had from Canada Life warned me of a shortfall in my 1994 endowment with Canada life due to finish in 2019. The endowment was due to pay off £55k but the latest projection (growing at 4%) is for £23k a shortfall of £32k. I have looked at the fund - Multiple Investment Account LS3.

What should I do? Should I change to a different fund? Cash in the plan? Top it up? Please can someone advise me - I really do need help.

Jimbo1976

I don't think changing it to another fund is going to make a huge difference. I'm not an expert but I don't think surrendering the plan is normally a good idea, especially if it is with profits.

I would not top it up. 7 years isn't a huge length of time for fund growth.

I would start to try to make lump sum reductions to my mortgage as quickly as i can. Check the originally documentation to see if you have any penalties for early repayment. Most mortgages will allow you to pay off up to about 10% of what you owe, each year without penalty.

Obviously 7 years, is not a long time to back down such a lot of capital so its a good idea to speak to your lender now about extending the term. Most lenders are aware that there are a lot of borrowers who either don't have repayment vehicles (endowments etc) or whose repayment plans will fall short (like you), they should take a realistic and common sense approach

dunstonh

Easiest option is to convert £32,000 of your mortgage to repayment basis. The sooner the better. Ideally it would have been better doing this back in the early 2000s when you first became aware of the issue. Now it will be quite expensive. Although with mortgage rates at all time lows, it will quite possibly be no more than you were paying when mortgage rates were at more typical levels.