Endowment shortfall

anteater99

Anyone else with this problem? Help!

We have an endowment which matures next year with a huge shortfall. Having 5 kids we were unable to pay more. We felt we'd been mis-sold but the Ombudsman at the time said no.

What have others done in a similar situation? We're thinking our only option is to sell as the bank aren't interested and have said they won't correspond with us any more.

We were mis-led as they said it would cover the mortgage and give us a lump sum for retirement. Not a chance! Gutted.

Advice welcome.

amnblog

Sounds like you left it a tad late to decide there was an issue.


If the bank have already investigated the position and you have referred to the ombudsman - that is as far as it goes.

maninthestreet

anteater99 wrote: »

Anyone else with this problem? Help!

We have an endowment which matures next year with a huge shortfall. Having 5 kids we were unable to pay more. We felt we'd been mis-sold but the Ombudsman at the time said no.

What have others done in a similar situation? We're thinking our only option is to sell as the bank aren't interested and have said they won't correspond with us any more.

We were mis-led as they said it would cover the mortgage and give us a lump sum for retirement. Not a chance! Gutted.

Advice welcome.

So how much is the shortfall, and how much do you currently owe on the mortgage? When does the mortgage have to be repaid - next year??

silvercar

|Remortgage to take account of the shortfall. Extend the term and make it a repayment mortgage. Take out life insurance. It will cost, the longer the term of the mortgage the cheaper the repayments. You won't have an endowment to repay once its matured so that will save a bit, but it means you will have a mortgage for longer.

dunstonh

We felt we'd been mis-sold but the Ombudsman at the time said no.

The ombudsman is slightly consumer biased. it is not a consumer champion but an independent arbiter of complaints. However, unlike a court of law, it considers fairness and simplicity and ability to understand. So, if they say no, its likely that it wasnt mis-sold.

We were mis-led as they said it would cover the mortgage and give us a lump sum for retirement. Not a chance! Gutted.

Could give you a lump sum for retirement or would give you a lump sum for retirement? One is a mis-sale the other is not. One change of a letter changes the outcome. 20-25-30 years later, can you prove what was said all that time ago? Especially when the risk warnings say you could get back less?

Having 5 kids we were unable to pay more.

Perhaps you should have considered having less children if you could not afford to have them. I know that sounds harsh in one respect but the endowment shortfall is not the cause of your problems. You living beyond your means is.

If we look at some of the events that caused endowments to fall short, there is the happy outcome for mortgage holders that has seen interest rates fall significantly. So, during this period when your mortgage has likely dropped many hundreds of pounds, what have you done with that money? If you still couldnt afford to put money aside or overpay the mortgage in that period then you have a wider financial problem and need to get help in controlling your spending and debt.

You have known of this potential shortfall for about 13 years. Just £30pm 13 years ago would have generated around £6500 now.

TBagpuss

You have two options. One is that you do as Silvercar says, remortgage with a repayment mortgage to cover the amount of the shortfall (have a look at the calculator http://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator to get a feel for what your repayments would be based on the amount you'd need to borrow, and the period you would be borrowing over, which will depend on your ages)

The second option is to sell the house and downsize to something which you can afford.

presumably you have have known for some time about this shortfall. It's unfortunately that you have left it so late to address.

If you go over to the debt free wannabe board and give more details about your income and and outgoings you will find lots of help about budgeting to help you work you what you can afford and how you can manage your finances moving forward.