do you accept the first compensation offer?

philipsmith1969

Hello all

some advice if i may.

25 year £40,000 endowment, taken out in 1991

I have just received a letter from Prudential after making a claim for compensation offering £2650.
Is this figure about right?
Do you accept the first offer?
Or is it calculated against a known table of figures and you get what you get.

Thanks

Phil

EdInvestor

Yes, you do.It's not a bargaining matter.Did you perhaps think it would meet your endowment shortfall?That's actually not the point.It's designed to put you in the same position as you would be in if you'd taken out a repayment mortgage. In fact you've probably paid out a lot less than that.

To deal with your shortfall you should do the following:

1.Surrender the endowment ( replace the life cover first if you need to)

2.Pay the 2 lump sums of redress money and endowment surrender value into the mortgage to reduce the size of the loan

3.Increase the monthly mortgage payment by the endowment premium, so as to overpay the loan.

This will help a lot in tackling the shortfall problem.

You could also look at remortgaging to a better loan deal with a lower interest rate, either now or later.To cover the shortfall completely, you may need to extend the mortgage term.

turbobob

Hi there. Mortgage endowment compensation is normally calculated using a formula that aims to put you in the position you would be in if you had taken a repayment mortgage, as said. There is software which is widely used across the industry for doing this.

Its not really a matter of judgement, like someone sat there thinking "I'll give them x amount". And holding out for a better offer will not get you anywhere unless you have information that might affect the calculation. Providing the calculation has been based on the correct mortgage information, then it is all you are likely to get. Where you are most likely to get differences in how companies calculate is where you have more complicated mortgage arrangements.

Without knowing any other details £2650 sounds about the sort of figure you might expect really.

dunstonh

And seeing as it's a Pru endowment and given their track record so far of 100% hitting target on maturity, it seems very fair. I wouldnt be surprised that the only reason you are getting that amount is due to the surrender penalty.