Endowments policy...

[ummmm]

Got a letter through...saying..

RED ALERT: HIGH RISK OF SHORTFALL.
There is a high chance that your plan won't pay out enough to cover the target amount of XXX. If you have not already done so, we strongly suggest you consider taking action to make sure you'll be able to repay the whole of your mortgage loan.

What action can we take?

[Nosha123]

Hmmm.. does this fall into the 'mis-selling' theory???
As Martin lewis on GMTV always goes on about

[tiggerblue10]

Is it a mortgage policy?

I've been getting letters like this for a while now. About 5 years ago I converted some of my mortgage to a variable one so that when the time came there wouldn't be much of a shortfall and less to pay out from my pocket. I'd speak with a financial adviser at your bank Ummmm. They should be able to advise you what you can do.

[tiggerblue10]

Oops sorry! Just seen that it is for a mortgage.

[ladybird49]

I think its to late now ummmm , conned by endowment mortgage as we were : /
read this

http://news.bbc.co.uk/1/hi/1887292.stm

[Nosha123]

http://www.moneysavin.../endowments-miss-sold

[tiggerblue10]

I complained to the Ombudsman several years ago and got about £3000.

[ummmm]

Thanks everyone. I think you've read it like my OH did in that we can take action against them. I read it like we NEED to take action now ourselves...as in up the payments. If he'd read past the first page he would have seen that they have suggested upping the payments by £50 a month.

He's annoyed because when he took out the policy he was told it would cover the mortgage and he'd get a lump sum.

But how would we know that the £50 will cover it?

Thanks for the link...I'll have a look.

[R1Geezer]

Personally I'd put the £50 into some other savings vehicle, probably better to just overpay the mortgage by £50 a month.

[ummmm]

I don't think you can do that with an interest only mortgage.

[dasherman]

Possible course of action:

1) Pay more into endowment - possibly throwing more money after bad.
2) Pay more into another savings vehicle like a shares ISA and hope that will be enough, assuming at least 5 years to endowment maturity.
3) Change form interest only to repayment mortgage therefore guaranteeing paying off the mortgage instead of hoping other investments will do it for you.

My personal choice would be number 3.

[ummmm]

We were thinking 3 as well...must look into it.

[R1Geezer]

you can usually ummm, just find out the sort code and account and set up a standing order.

[R1Geezer]

in fact if you take the route I suggested you can pay as much or as little above the interest only as finance allows, essentially you creat your own flexi mortgage.

[ummmm]

Cheers Geezer...I'll check that out.

[tiggerblue10]

I switched part of my interest only mortgage to repayment as I couldn't afford to switch the whole lot. It still helps though.

[smurfchops]

we had an endowment with L&G and at the end of our mortgage they didn't want to give us anything back .. the Financial Ombudsman gave us back a darn sight more than £3,000!

[smurfchops]

Sorry didn't really explain very well. L&G offered us £200 which we refused. They said they hadn't done any wrong when in fact they had. So we contacted the Financial Ombudsman, gave them all the dates, etc. they were absolutely brilliant -- and eventually L&G admitted they were in the wrong. we got over £6,000. So don't ever ever give up and let them get away with it.

[ummmm]

£6,000 for what Smurf?

[smurfchops]

Mis selling the endowment. Making me take out a new endowment when i wanted to borrow more on the mortgage. Making me take out a new endowment when I moved house. I was so naive, I didn't realise I should never never stop an endowment, it should just run on until the end of the term. Every time I took out a new endowment, i lost money because I stopped the endowment and trusted their advice. Luckily I remembered the name of the second L&G agent as OH was friends with his brother. Some friend he turned out to be, just wanted his commission on a new sale.

[McMouse]

My mortgage loan was supported by several endowment policies and on maturity they not only paid off the mortgage but delivered huge bonuses. Mind you that was when such policies were earning good annual bonuses and generous terminal bonuses. In your case you should explore whether you were mis-sold. If you weren't then you need to cover the shortfall in some other way or explore if you can reschedule the mortgage term.