How to prepare for big endowment shortfall?

Lady_K

I have an endowment mortgage that finishes in October 2014 according to my yearly statement from Standard Life at worst its going to be about 18K short, at the moment that is, it could even get worse. It was only for 27k in the first place. I did claim missold endowment and they gave me just over 1k big deal. My mortagage is with Halifax and they are the ones that sold me the standard life at the same time in thier offices

Do you think things will get better or worse for me with this? I've not done anything to prepare for it at the moment but was thinking about it but I just am not sure which is the best way or even if I can afford it as I'm out of work through illness. I know I could get a mortgage to cover the missing amount but with me being out of work I don't know if I'd get one and I don't think I'll be able to pay it anyway

Is there anything I could do about this?

dunstonh

Standard Life projections are notoriously inaccurate. It was only until last year that the lower projection used to give a figure that was less than the minimum maturity value.

I did claim missold endowment and they gave me just over 1k big deal

Which suggests it may not be that far off target. The surrender penalty may be more than £1k which would mean you are better off at that point.

Do you think things will get better or worse for me with this?

Standard Life are not the worst and not the best. The future potential isnt the best but we are seeing surpluses appear on their plans and their terminal bonuses are increasing again (which is where the bulk of the returns are going to be).

It really depends on it's current position.

Is there anything I could do about this?

The policy needs reviewing and compared against other possible options (where are keep, switch to S&S ISAs, switch to repayment...). Whichever option is best, you go with.

Lady_K

They gave me the 1k about 2 years ago but they put in my yearly statement that it was urgent that I prepare for the shortfall. I really hope they are almost 18k innacurate then with mine. The lowest they put it could be was about 7k but We did used to have a promise amount on before which they have now got out of

What is s&s?

dunstonh

The projections do not include any current terminal bonus that exists on the plan or any potential mortgage promise value. It is worth finding out what both of those values are (the mortage promise value will be a rough value as it will vary depending on performance).

You can add both of these to the projections and see how that compares.

S&S = stocks and shares ISA. These are cheaper than endowments and more tax efficient. Plus investment options are nearly always better. However, the time left and the surrender penalty, plus need for life cover can make them better some of the time but not all of the time.