Mortgages Uncovered

Now that endowment policies are beginning to mature at the staggering rate of 50,000 a month to clash with those insurance companies who have had to make down their values due to their previous year’s drop in share prices.

A brief history on endowment mortgages:

It is a savings plan which is linked to either the investment in bonds, property or shares and is designed to completely pay your mortgage off when the loan is due for final repayment. This type of mortgage plan typically will mature after 25 years.

In the 1990s, endowment mortgages became notorious due to the financial regulators alerting those homeowners with this type of policy that they may not get what they expect from their repayments.
The nightmare of then has become a reality now because suddenly there is a rise in the amount of policies that are paying out during the credit crunch.

There are literally 100,000 people who will now find that there is a much larger shortfall between their home loan and their investment policy (which was supposed to be completely paid off at the end of the term).

Lynda Kennedy, from Foster & Cranfield, (who auctions endowments), warns that the next couple of years could be very difficult. Many endowments sink or swim on the basis of a bonus paid at the end. But she reports that final bonuses are being slashed by as much as 75%. “I would say brace yourselves: it’s going to be a tough ride for some people. Your mortgage may not be paid off and you should make every effort now to make allowance for that.”

More mortgage information:
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