Endowment is predicting a short fall !

[Mike]

Hi all

My endowment is predicting a short fall of about £20,000 on a £50,000 mortgage.

What do people think it’s best to do………à¢Ã¢â€šÂ¬Ã‚¦..

Convert 20K to repayment (8 years to go)

Stop paying in and invest the £73 pm else where

Cash it in and invest £73 pm else where

Do nothing

Cash it in and get very very drunk !!!

Thanks

Mike

[Mr_love_monkey]

Originally Posted by Mike

Hi all

My endowment is predicting a short fall of about £20,000 on a £50,000 mortgage.

What do people think it’s best to do………à¢Ã¢â€šÂ¬Ã‚¦..

Could you complain that you were missold the policy in the first place?

[spanna]

OK I am not a financial advisor but I would just convert £20000 to repayment.

The figures used to calculate whether there will be a shortfall are based on set percentages of growth and are not related to YOUR endowment fund.

Ring up the bank and ask how your fund is currently performing you will probably find that it is performing better than the figures given in your letter (they can't say that it will continue to perform at this rate, but at least you will know that the doom & gloom letter is probably exagerating the problem)

Do not ignore the problem

Do not just cash in your endowment

Just my 2 cents

[joglynne]

Mike. It may pay you to have a look at the Money Saving Expert site before you do any thing that could change your legal position.

How do I know if my endowment was mis-sold?

This is the crucial bit, so it's time for some big letters.

If your endowment was mis-sold, this means not just that it did under perform, but you weren't told it may under perform or were incorrectly advised

Time is running out to make a complaint and get compensation. You have either six years from when you bought your policy, or three years from the date you realised it might have been mis-sold – whichever is longer.

http://www.moneysavingexpert.com/rec...-sold#affectme

[TheNorm]

Originally Posted by Mike

...My endowment is predicting a short fall ...

I* have a similar problem. Unfortunately the mortgage was agreed before the cut-off date for mis-sold policies, so there is no hope there.

I'm thinking of letting the policy go to its natural end, then getting another mortgage (repayment) to make up the difference. The value of the property has increased tremendously, so I don't think this will be a problem. Also, a mortgage is the cheapest way to borrow money, and it won't be long before I have two sets of university fees (and cars) to pay for.


* actually my wife and I, but when it comes to "making a loss" the ball seems to be in my court.

[SMHarman]

Originally Posted by Mike

Hi all

My endowment is predicting a short fall of about £20,000 on a £50,000 mortgage.

What do people think it’s best to do…………..

Convert 20K to repayment (8 years to go)

Stop paying in and invest the £73 pm else where

Cash it in and invest £73 pm else where

Do nothing

Cash it in and get very very drunk !!!

Thanks

Mike

20,000 / 8 = 2500 a year to find = another 208 a month to pay them.
Your best return from an endowment policy is to run through to the end so you should probably keep it and carry on paying in to the end.
You could talk to your mortgage provider and ask what they do with overpayments and when they apply them to capital. You could potentially just keep the same mortgage and start overpaying by 200-250 a month. If they apply those overpayments to capital and reduce the interest charge monthly then that will have the same effect as a remortgage without any costs.

Some only apply overpayments to capital anually so in that case you would either need to save the money elsewhere and make those repayments into the account in time or remortgage.

Another consideration is what you are doing with pensions. You may have a lump sum coming from a pension but being as you will only be 53 when you pay this mortgage off that does not seem likely.

You should also consider other future expenses that may be coming up. Will you be putting your hand in your pocket for university expenses or similar? You might want to look very carefully at offset mortgages. This won't make the problem go away, but you could manage it differently, putting the 200 a month into a savings account and if you need it for an emergency it is more readily available (but will still need to be replenished to ultimately repay the mortgage).