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. BBC News: Endowment mortgages - have you acted yet? Q & A: Endowment mortgage shortfall
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