So I know there will be lots of people that will give zero shits, but to me this is a bit life changing but ultimately it won't kill me. I have an endowment mortgage that is due to mature at the end of this year & it won't hit the required amount, it hasn't for years, but I have been saving to try & negate the shortfall. There is a chance that the provider will top it up (but not to the full amount, probably £10,000 if I keep it to maturity) but as it's linked to the stock market do I bail now at the current market value which will be much less that a few weeks ago or keep it & hope the market bounces back a little between now & October?
Another shit gamble I have to take, why or why did I not just go with a repayment mortgage 25 years ago 🙁
Do you have the option to pay the interest but leave the endowment in the market for now? The answer may we’ll be no, but if you can the market will recover at some point.
How long? Different question.
Another shit gamble I have to take, why or why did I not just go with a repayment mortgage 25 years ago
Because the industry was still hard selling endowment shite. I bailed on mine and went repayment which stretched out my overall mortgage period to about 30 years...
If its a with-profit endowment bonuses cant be taken away once added.If its invested inunit linked funds things are a bit different.
My endowment policy valuation in the latter years was pretty stable, no idea if they are all the same. I cashed mine in in year 23 so missed all the final bonuses but had a better home for the money.
I m pretty sure I was compensated back to where I would have been if it were a repayment mortgage.
Sorry it was a while ago so cannot remember the detail.
Ah previous post has it it was the former so cumulative profits were locked in. I know i tracked the performance monthly and it was pretty stable
Still confused but thanks for the reply's, it feels like I'm being forced to take another gamble or take the money now although I don't dare to call them to see how much it has devalued since the last letter in january.
Ho hum, it's only money...
Kept my original endowment going as a simple savings plan. Matures in June. How quickly will the markets bounce back? 🤞
We had a with profits endowment with Norwich Union. When the first shortfall was predicted they made a “promise” to make up any final shortfall capped to the amount forecast at that time.
It wasn’t guaranteed so I moved to a repayment, extended the term a bit and kept the endowment.
The endowment matured, with profits and the shortfall promise. The actual shortfall was greater than then promise so we we short of the total the endowment was supposed to cover. Fortunately it was only a few £k short and having switched to a repayment the mortgage was cleared.
Don’t they switch away from risky shares as it nears maturity?
Ps- when the shortfall promise was made it was c£9k under target. That grew at one stage to over £20k but then dropped in the later years so it was just over £9k short.
is it With Profits?
is it With Profits?
Yes, & it has a guaranteed future value which is some £15k less than the last surrender value.
Don’t they switch away from risky shares as it nears maturity?
No idea, I really should look into it more but just a bit worried about it ATM.
Cheers.
Another shit gamble I have to take, why or why did I not just go with a repayment mortgage 25 years ago
Ugh - why haven't you switched sooner? As for your current situation, good question - unfortunately it would take a crystal ball to answer as we're still at the very beginning of the economic fallout from this. No one's sure yet how much money governments are going to inject to prop up the markets and without knowing where your investments are you can't even assess the risk.
Ours paid out in November which was a good thing because I wouldn't have liked it to get any worse. It ended up £18k short. It's not needed for the mortgage until this November so we were going to save like mad for the next eight months to make the defecit smaller. This isn't going to happen now as I'm self employed and it looks like I'll lose all my work now.
I have one maturing next month! Its not actually needed for the mortgage as we switched that years ago to a repayment but was hoping it was going to buy me a new camper. No idea what impact the current market level will have. My other savings/shares have halved in value 🙁
My endowment which was with Scottish Widows was a with profits policy so I couldn’t lose already allocated bonuses. Matured in December. Was supposed to cover £40k paid out £35k. Predicted shortfall was worse. Normally I would say wait for the maturity bonus.
Interest rates are so low now you should be able to get a cheap loan to cover a shortfall if you need savings for something else.
Get an interest-free credit card, stick the shortfall on it then cut it up?
Because the industry was still hard selling endowment shite. I bailed on mine and went repayment which stretched out my overall mortgage period to about 30 years…
I was persuaded to go repayment, linked to personal pensions along with a work pension with 50/50 contribution. I was made redundant from that well-paid job, and just couldn’t find the means to keep up contributions.
Anyway, when the mortgage came due, I had more than enough in one of the plans to pay it off, leaving me with a chunk of cash to play with. Except I hadn’t been warned about the tax that would be due on withdrawing the money, so I was shafted to the tune of £11,000 in tax!
Not at all happy with the advice I was given, I could have done a lot with that £11k. 😣
Wasn't there some sort of PPI kind of thing around endowments as alot were hard sold back in the day so under todays rules would qualify for mis selling. I remember when I got my first house 23 years ago I was adamant I wanted a repayment but all the providers were pushing endowments. I'm now glad I stuck to my guns as most people I know who got endowments wont be able to cover their capital and certainly wont deliver the additional bunce that was promised.
Yes there was- it predated the PPI claim. Our annual endowment statement had sufficient warning of a shortfall for a good 15 years or so before it matured and in big bold letters advised us to do something to ensure we could pay it off.
I have spoken to them today & had some better news than expected as the majority of the policy was already guaranteed & not affected by the current situation, so I'll add some numbers to my options.
1, If I surrender today it will cover 72% of the initial sum
2, The least it will cover if I leave it until maturity is a guaranteed 66.6%
3, The most it will cover if I leave it until maturity is up to 100% (but unlikely)
So my "gamble" at present is only -6 to +28% so I'll stick with it until the end.
Thanks for all the input & FWIW I already have the money to cover any shortfall based on the numbers above.
Cheers.
They should move out of higher risk investment towards the end of 3term
Then buy into bonds, gilts cash or gold as they tend to be less volatile
This is probably why your money is not as short as it might be
This might sound bonkers but have a look at re mortgai going on. The rates are crazy low. Go term collect final bonus, borrow remaining balance plus a few thousand on a new low fixed rate deal and buy some toys, car, conservatory etc
Glad to hear things turned out better than you feared. That would have given me sleepless nights.
