A Question of Finance
Q. A friend told me that there is a stronger chance now that my endowment policy will not pay-off my mortgage. Is this true and what should I do about it?
A. Sadly, this is true. The catastrophic events in the financial markets have caused the shares in which your endowment is invested to plummet. Consumer advocates Which? believe that 90% of endowments maturing this year will not clear the mortgages as intended.
The advice from Which? is that anyone whose endowment will not pay-off their mortgage should speak to their mortgage lender and ask them to take a sympathetic approach. If you do not have savings to cover the deficit, ask your lender to extend the term of your mortgage. If this is likely to cause you serious hardship, you should consider speaking to a money adviser (such as Citizen’s Advice) on what other steps you might take.
You should have received either a ‘red’ or an ‘orange’ warning letter if your endowment is underperforming. Because of the scale of the collapse in share prices in recent months, some people will be receiving a warning letter for the first time.
If you believe you were not properly informed at the time you took out the endowment that it might not pay-off your mortgage, or the endowment was not suitable for you, then you may have a case for lodging a claim for mis-selling. This could lead to compensation being paid. There is a time limit in which to lodge a claim – so submit a claim soon after receiving the first warning letter.