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We
spoke to Bedfordshire couple Jane and Paul and found out their experience
of endowment mortgages.
Back
in 1985, taking out a 25-year endowment mortgage policy was supposedly
a sure-fire hit. Stock markets were buoyant and borrowers using
a straight repayment mortgage paying interest at 12.7% or more soon
regretted it!
Now,
some 20 years later, along with thousands of other people who set
up endowments to pay off their mortgages, we have resigned ourselves
to the fact that the policy we were sold, and which we were told
would pay off our mortgage and leave us with a tidy lump sum, has
not performed anything like as well as we had been led to believe
it would.
In
fact current forecasts predict it will fall short by some £8,500.
So
now, with some five years remaining on our mortgage - we're left
with a dilemma.
We
now know that at a time when our two children will hopefully be
furthering their education at university, looking to buy their first
car or even considering marriage - all of which are sure to make
a hefty dent in our finances, we will also have to find around £8,500
to pay off the mortgage.
So
what are we doing? At the moment, I'm ashamed to say that we're
behaving like ostriches - hiding our heads in the sand - and hoping
that our mortgage will miraculously sort itself out or we'll win
a useful amount on the lottery and all our problems will be solved!
However,
this is the real world, and we do need to sit down together with
our building society to decide on the best course of action to take.
Possible
solutions could be that we switch the amount of the projected shortfall
to a repayment mortgage or even convert the whole loan to repayment.
Another
option would be to start an additional savings plan, and for both
of us to 'tighten our belts' and make regular savings each month
which would hopefully make up the shortfall.
The
Government's Financial Services Authority are encouraging anyone
who feels they were mis-sold their endowment to lodge an official
complaint - but how on earth are we supposed to remember exactly
what that insurance company's representative said to us over a cup
of coffee some 20 years ago?
How
can we ever prove that we were assured our endowment would easily
pay off our mortgage and that we'd have enough left over to perhaps
change the car and have a nice holiday?
It
almost seems as though we simply have to accept the fact that as
20-something newly weds we were naive enough to believe that what
we were told by our building society and insurance company was in
our best interests, when now it's all too clear that it was in fact
in everyone else's interests except ours.
You
too?
Have you been caught in the endowment mortgage trap like Paul and
Jane and now find yourself with an insurance policy which has no
hope of paying off your mortgage? What did you / are you doing it
about it. Tell us your experiences here.
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