Endowment mortgage query

Elaine853

I took on an endowment mortgage in 1996. 8 years later a letter warned me they predicted I would owe more that the total house purchase cost at the end of the 25 year mortgage. I panicked and changed to a repayment mortgage starting the 25 year term again. Can anyone advise what happens to the money I paid for 8 years? Is it lost? Or is it not worth chasing? And if it's worth looking into it..where do I start? Many thanks.

jaybeetoo

You would have been putting money into an endowment. What happened to it? Do you have any paperwork when you took it out and when you switched to a repayment mortgage? Did you stop paying into it?

silvercar

You would have paid interest only on the mortgage, so that was a cost of taking that mortgage and you aren’t owed anything from that. You would also have paid into the endowment policy, what happened to it? Did you make it paid up and not contribute further? Or did you just cancel it? In those scenarios there would be little if anything to pay out. Or you may have continued with the policy to expect a payout in 2021.

silvercar

Did you ever claim any misselling from it? That was quite popular for a while, the endowment provider would have calculated how much you may have lost out by taking an endowment rather than repayment.

Broadly speaking you paid reduced mortgage payments for 8 years, compared to what a repayment mortgage would have been and consequently now have a mortgage for 8 years longer than originally intended. Though if you sell the property, you will clear the mortgage and can make new decisions moving forward.

Keep_pedalling

TheYour payments would have consisted of two elements, the mortgage and the endowment policy linked to it. All the mortgage payments were for interest alone so that is gone. It is possible that that the insurance policy was made paid up and a payment to you would have been payable at the end of the term.

Do you know who the endowment policy was with?

poseidon1

After asking pretty much the same question back in 2023 ( see below ), are we to understand you made no effort at all to discover what you may have done with the endowment policy after switching to repayment?

As mentioned above possibilities are you have cashed in for whatever it was worth but don't remember doing so; made a compensation claim for misselling; or the policy is sitting dormant waiting for you to claim a maturity value.

However if you have done nothing towards resolving matters 3.5 years on, difficult to see what you can do differently now.

https://forums.moneysavingexpert.com/discussion/6419119/payments-on-endowment-paid-before-switching-what-happens-them

penners324

You asked the same question 3 years ago. Why didn't you follow it up at that point?

Contact the provider of the endowment to get your money

dunstonh

I took on an endowment mortgage in 1996. 8 years later a letter warned me they predicted I would owe more that the total house purchase cost at the end of the 25 year mortgage. 

Not quite. They did not predict you would owe more than the total house purchase. Indeed that is impossible

The endowment provider would have issued projections. In the early 2000s following the dot.com market crash projections would have shown a shortfall on the endowment. Most of these retained went back to surplus positions again although many people called it a day at the time.

As long as you were paying the interest on the mortgage, you could not owe more than you purchased for it.

Can anyone advise what happens to the money I paid for 8 years?

A number of things can happen.

1. you make it paid up with the life assurance element cancelled. It retains what value it has and continues to grow. You continue to get annual statements until maturity
2. you make it paid up but do not cancel the life assurance element and the cost of the life assurance is deducted from the value of the investments until ultimately, there is nothing left in the value and the policy lapses with no value.
3. you surrender the policy and the balance goes to the lender to offset the mortgage balance
4. you surrender the policy and receive the proceeds directly.

A 1996 plan has a strong chance of being assigned to the lender so option 3 was most likely.

After asking pretty much the same question back in 2023 

Oh great, another time waster for the regular contributors here.