Endowment policy won’t cover mortgage for 86% of homeowners

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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