Endowment mortgage shortfall

[lizwizz]

We have recently been offered a sum of money to compensate us for financial loss as a result of an endowment policy shortfall. The sum offered seems quite low compared to the projected shortfall, but the company says it has used the same software used by the ombudsman to calculate this. Is it worth a) holding out for a bit more or is it not likely to be increased? b) In view of the fact that our mortgage is comparitively low compared with the value of our house, is it worth converting to a repayment? Any advice would be appreciated.

[Postdog]

Don't hold out. It would be unlikely to be increased, but more importantly, there is now a time limit on making claims, and pretty soon you won't be able to.

I am in a similar position, in that my estimated shortfall will be about �20,000. My mortgage is �75,000, and my house value �210,000+, so if the worst comes to the worst, I could sell and just get a smaller place. I cannot afford a repayment mortgage, but a few years ago, I transferred my mortgage/bank account to one of those companies that do offset mortgages and flexibility with payments (If.com). So, I don't make any interest on my bank account, instead (minimal tho it is) it is credited towards the mortgage, I overpay as much as I can afford (and can change it online at any time if I can't afford to pay what I normally would) and I convert small amounts here and there to repayment/capital. At the moment I am about �5,000 in credit - well, not in credit, but what I mean is it's �5,000 already paid which I won't have to find.

Hopefully, with what I have done, I can beat the shortfall. I also read the other day that shares look like they are in for another boom time, so hopefully that too will help make a difference.

[Kathyan]

You won't get the full amount of the shortfall. The way they work it out is calculating what position you would have been in had you taken a repayment mortgage. Therefore if you had paid say, �5000 off your mortgage (not interest) in the same period as your endowment, this is the compensation you would get. I hope this makes sense!

[lizwizz]

Thanks for that postdog and Kathyan

[Sparkles3]

We have converted some of our mortgage to repayment (we still have 18 years left to run) as our endowment is showing a potential shortfall. We are continuing to pay into the endowment so we will have this money (however much it ends up) at the end of our mortgage to pay off a big chunk, if not all of it - we would intend to remortgage that last bit as repayment if we haven't dealt with it in another way before that. We have also spread the risk by taking some of the mortgage as repayment. As Postdog says, shares are increasing again, so I'm ever hopeful!!! Hope it all works out.