shortfall - endowment.

aggypanthus

I have 2.5 yrs till end of mortgage, but have a shocker of a predicted shortfall of 15k,
Where can I input figures to to find a payment solution? I dont have a clue how to work it out.!

PS claimed comp a long time ago, but it wasnt very much .

Let_Us_See

Why is it suddenly a shocker. You should of been receiving annual statements, including shortfall warnings!

BobQ

You cannot surely have just discovered this? Was the last statement saying it was on track with no shortfall?

The only solution is to start paying off the loan. Unless you have savings that can be used or are due a pension lumpsum you need to convert to a repayment mortgage asap.

Next year you could find that the shortfall is even higher so do not delay.There are any number of calculators available on line just Google "repayment mortgage calculator".

dunstonh

I have 2.5 yrs till end of mortgage, but have a shocker of a predicted shortfall of 15k,

Shouldnt be that much of a shock. You have known about it for about 13 years.

PS claimed comp a long time ago, but it wasnt very much .

Shame you didnt use the money as intended. Then you would not be in this position.

Easiest solution is to take £15,000 of your mortgage and convert it to repayment basis. It will increase your mortgage by around £700pm but it will solve the problem. Alternatively, ask the lender if they will extend £15k for 5 years and put that on repayment basis. Most will.

aggypanthus

I did have the warning letters , our last broker 5yrs ago kinda overlooked it.. we kinda just ignored it!
The shock element is the 15k as I had it in my optimistic head that its around 9/10 k , 15k is 50% of the expected payout.
The comp we got was around 1.5 k, as I said, not very much and it did go towards the debt.
I can pay in 5k now, rather than in an ISA I think?

I shall google a calculator, thanks everyone .

PS currently pay £125 a month, so £700 is scarily massive!!

aggypanthus

dunstonh wrote: »

Shouldnt be that much of a shock. You have known about it for about 13 years.



Shame you didnt use the money as intended. Then you would not be in this position.

Easiest solution is to take £15,000 of your mortgage and convert it to repayment basis. It will increase your mortgage by around £700pm but it will solve the problem. Alternatively, ask the lender if they will extend £15k for 5 years and put that on repayment basis. Most will.

Our comp was have been quite low, are people getting higher ammounts these days?

holly_hobby

The compensation, isn't really compensation as such (as you can't be compensated for loss of expectation), but is the monetary difference between where you would have been if you had effected a repayment mge at outset, instead of an Endowment backed interest only arrangement.

Really, in addition to reducing the mge by the payment awarded, you should have at that point change to a repayment mge - the fact that you didn't and retained and serviced the endowment as a mge repayment vehicle, actually suggests you were comfortable with the risk profile of the policy ....

As suggested, speak to the lender now, put them in the picture and start discussions on how you may start to deal with this - which may be by a term extension (status permitting). Have you thought about also increasing what you are repaying to reduce the balance before policy maturity and scheduled redemption ?

Hope this helps

Holly

dunstonh

The comp we got was around 1.5 k, as I said, not very much and it did go towards the debt.

That means at the point of your complaint response, you should have taken the £1.5k and surrendered the endowment. Then paid the two amounts into the mortgage and convert to repayment basis. If you had done that, it would have put you in the same position you would have been had you had a repayment basis and you would have continued from that point and have no shortfall now.

Our comp was have been quite low, are people getting higher ammounts these days?

There are very few endowment complaints nowadays. Most are timebarred. However, your amount is not unusual by any means. Often it can come down to when you complained (e.g. complained when you had a long time left to go vs short time or when markets were high vs low).

Most lenders will extend the mortgage by up to 5 years if you are not in arrears or have poor credit records with them. They are used to people having shortfalls and will act fairly if you have a good record with them.

aggypanthus

But, back then all the advice was against surrendering the product, and then the prospects of such a low return was not on the Radar! , we claimed about 12 yrs ago and 15 yrs seemed such a long way off.. also repayments were way off our budget scale to enable a switch.

Thanks for all the advice everyone.

kingstreet

If you can't afford to convert to repayment, at least make some overpayments so the deficit is lower when it finally arrives. Then, you can remortgage that smaller amount, perhaps over a longer term, to get the payments down.

Don't forget, the resources you are currently spending on the mortgage and endowment now can be used to clear the deficit faster when the endowment matures and reduces the mortgage.

davenport151

You have a similar payment to me (but luckily still 7 years to go and endowment still running at present - though looking to change this in the near future).
Bear in mind you are benefitting from a low interest rate on the mortgage at present.
How much is the endowment payment? Don't forget if you cash this in thats extra money that can go to the mortgage every month.