Endowment policy won’t cover mortgage for 86% of homeowners
by Kay Murchie
Endowments were primarily taken out as a savings vehicle expecting to pay a mortgage off or to have a lump sum available at a specific time.
They have always been considered a good investment for homeowners but the reality is that 86% of endowment policyholders have received warning that their policy will not be enough to pay off their mortgage.
41% of those are expecting a shortfall by as much as 25% which will mean they will have to find funds elsewhere.
This latest research is from Fairinvestment.co.uk whose poll discovered that just 6% are expecting a surplus from their endowment policy while a further 6% are on track and expect to pay off their mortgage with the endowment.
Back in 2003, the Government estimated that 80% of endowment policies sold were unlikely to pay off the mortgages they were taken out for.
Since that time, it is believed that 70% of those facing a shortfall have re-mortgaged, sought financial advice or applied for compensation.
Sharon Bratley of Fairinvestment.co.uk said their study reveals what a let down endowment policies were and still are.
Ms Bratley advises those who have not yet done anything and are expecting a shortfall to take action now.
It is believed that over 10 million mortgage endowment policies were sold in the UK during the 1980s and 1990s.
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