Endowment mortgages that promised to pay for their houses are reaching the end of their term with massive shortfalls.
And this can be extremely worrying and stressful, particularly if you were hoping to reduce your working commitments or retire.
If you have received a letter from your endowment provider saying that your policy is not on track to pay off your mortgage, it's essential to take action immediately.
Finally, if you shop around for a better deal, you could actually cover your endowment shortfall and save money at the same time - giving you the best of both worlds. It is a myth that the endowment policy and the mortgage are inextricably linked.
The endowment is merely the repayment vehicle, and the mortgage may still be switched from one lender to another to take advantage of the best rates of interest.
It is therefore worth reviewing the mortgage as a whole to see if switching to a better rate with a different lender could tackle the shortfall issue and reduce the amount you pay each month.
Switch
For example, if you had a �10,000 shortfall against a �100,000 mortgage, with 15 years left to run, your monthly mortgage payment now (at 5.75%) would be �479.17 per month.
If you simply switched the �10,000 shortfall to the repayment basis then your monthly payments would increase to �515.66 and the shortfall problem would be erased.
If however, you were also able to switch your mortgage to a lower rate of 3.75%, then your monthly payment would reduce to �354.90.
So not only would you be dealing with the potential shortfall, but due to the lower interest rate, you'd be paying �124.27 a month less than you do now!
Figures correct at 28 January 2004.
One-Minute World News 
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