Endowment mortgage has come to an end, what are we going to do?

Catonthemoon

AFAIK, endowment mortgages (which were extremely popular in the 80’s/90’s) were taken out so that when you had repaid the total interest, hopefully, the endowment policy would have performed well enough in order to pay off the capital.

If a policy wasn’t taken out at the time of the mortgage application, then you must have taken out a different mortgage product. Was this not clearly explained to you by your provider or did you know that you would have to pay a large capital sum at the end?

silvercar

https://forums.moneysavingexpert.com/discussion/comment/82030187#Comment_82030187

Often borrowers were left to sort out their own policies, as lenders stopped taking a legal charge of the endowments. My lender would write regularly to remind me that I needed a plan for repayment. Not everyone's plans worked out over a 25 year period eg income dropped, savings dropped, money was used elsewhere. It isn't surprising that over a 25 year term, some people have not been able to set enough aside or have a plan for repayment. Some people had plans that just meant downsizing when kids had left home. Kids who now remain in the family home for longer than originally expected.

No point crying over spilt milk. I would have thought that at the age of 58/61 it would be possible to get a mortgage that would last 14 years plus depending on occupation.

MWT

https://forums.moneysavingexpert.com/discussion/comment/82030187#Comment_82030187

The mortgages reaching term now were typically taken out around 2000 and by then we were in the period of self-certification without any compulsion to actually have a credible plan beyond down-sizing or selling.

I'd expect to see many more like this over the next few years.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/82030374#Comment_82030374

Earlier than that. When I moved in 1993, taking an endowment policy was optional. By 2006, when I moved again, I was required to outline a payment plan, but pension/ savings/ downsizing were options.

MWT

https://forums.moneysavingexpert.com/discussion/comment/82030593#Comment_82030593

Agreed, I didn't say it started then, but most of the earlier loans have reached the end of their term by now.

It was a crazy time for due diligence on lending and for some that gave great opportunities, for others it is just now coming back to haunt them…

Altior

https://forums.moneysavingexpert.com/discussion/comment/82030682#Comment_82030682

They must know what is coming though. So it's an ostrich effect, rather than lending issues.

silvercar

Doesn't really matter what decisions, or lack of, led to the current state. What matters is going forward.

dunstonh

I have made an appointment for next week with a broker to see what they will advise but just worried that they will only have high street lenders and our options might be limited with them.

If you're seeing a mortgage broker, then that generally indicates that their whole of market. If you're seeing a mortgage advisor, then often they are limited to a smaller panel or even one provider.

If the broker is working out of an IFA or has explicitly said they are whole of market, then there isn't a problem.

They must know what is coming though. So it's an ostrich effect, rather than lending issues.

By 2001, most providers had stopped offering an endowment policy. There are only a handful of mainstream providers still left at that point. Although the last one to pull out was in 2005.

It seems likely in this case that the op made a conscious decision not to buy an endowment policy at the very start, but go with interest-only with no repayment vehicle. Given the number of letters the lender sent about ensuring they had a repayment vehicle, it was still a conscious decision not to prepare for it.

strawb_shortcake

In the early 2000's my Sister was working in an estate agents, the resident mortgage advisor was recommending interest only loans, setting up an endowment for the purposes of the mortgage lender and cancelling it once you'd moved in - I was only 21 ish at the time but thought then what bad advice it was!

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82031668#Comment_82031668

Mortgage advisors didn't hold the permissions to set up endowment policies. Endowment policies fell under investment class authorisations.

If an investment class advisor had done that then their KPIs would have been shot to pieces with NPWs and would have faced disciplinary action.

It's possible they just lied about there being an endowment policy rather than one being set up. It's not as if any lenders needed to see the endowment policy in the early 2000s.