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I have a question which probably sounds pretty stupid and I really should know the answer. Unfortunately we had an endowment mortgage covering the full value of our first house which is due to pay out soon (albeit with a massive shortfall). When we moved to a larger house, we were advised to keep that part of the new mortgage as an endowment and take out the rest as a repayment. When the endowment part matures soon, do we get a cheque for X amount which we can then give to the mortgage company to pay off a chunk of our current mortgage? I'll try to explain in figures. To keep things easy, say the endowment was for £75k and is now part of a £200k mortgage. If the endowment matures in a years time but is only worth £50k, do we get a cheque for that amount which we can give to the mortgage company therefore bringing our mortgage down to £150k? Sorry if this sounds really confusing but I don't know of an easy way to put it.
I hope so. As i have an endowment maturing in a few years time...Not for that much
Yes.
Your endowment will mature with a value. Just think of it as a large savings account with an access date (thats what it is)
You'll get a cheque for the value.
Just ring the endowment provider and your mortgage provider to find out what the crack is.
You get the cheque.
We had 3 seperate endowments and were amongst those lucky enough to be able to pay off our mortgagewhen the first 2 matured. We are geting the red letters for the 3rd endowment - if I'm lucky it might buy a new bike when it matures.
edit - Too slow !
The way it's going i will owe them!!
At some point you will have to pay up that lump sum. In the mean time you are paying interest on it. A few months before fruition of the endowment policy you'll have to contact the original mortgage company to get them to send a letter/note/intent of none interest. The insurance co. will advise you of this a few months before payout. You'll probably get paid the lump sum by cheque which if you have any common sense, you'll pay into/off the mortgage. The shortfall you can either, continue paying interest on (making other arrangements) or convert it into a repayment mortgage or other. I think this is how it works, not sure tho.
Think you are right but you may need to take some action to meet the shortfall in your endowment mortgage. The £25k you are short in that will need to be made up somehow. You mayhave to consider either a new repayment mortgage or adding that to your existing repayment mortgage, unless you have some other way of meeting the shortfall. The £25k won't just continue as a mortgage automatically, if your endowment mortgage has matured, you'll need to do something to cover any shortfall.
(should add I'm not an Ifa though)