RE endowment policie's

Status
Not open for further replies.

Larry

Lazarus
Joined
Dec 4, 2001
Messages
10,577
AFTER THE FUN BACK TO A SERIOUS SUBJECT.
Just had the di sistrous new's my endowment policies won't make the money to meet mortgage by at least 10.000./13.000 any financial wizards out there that could help me make a descision as to what to do.
ie ,Pay extra, sell & revert to a repayment etc. I'm in need of some serious independant confidential financial advice on this one.Any one there that can help pm me or email me please


Datafile2.jpg

Anyone who stops learning is old.
Wether at 20 or 80.
Anyone who keeps learning stays young.
Cheer's Larry AKA as toma say's Shimano Man The Tackle Tart
 

norm

Regular member
Joined
Mar 17, 2002
Messages
10,596
larry

i have had a letter telling me that mine will be 10,000 short

so i have changed mine to a 20,000 endowment and 10,000 repayment mortgage

so at the end of the term even if you are 10,000 short it would have been paid by the repayment anyway

this may not be the best way but it was the only way that i could see of doing it

 

Dave

Red Leader
Staff member
Site Supporter
Joined
Aug 8, 2001
Messages
61,144
I'm not a financial wizz kidd by a long shot but you have three options open to you,

  • Continue with the endownment but increase it to meet your requirements
  • Sell the endownment to one of the many companies that buy them - not the insurance company that sold you it though. Doing it this way you can get a higher return. Use the money raised to pay off some of your loan and then convert the balance to a repayment
  • Make the endownment 'Paid Up' and leave it sit for the remainder of the term, then convert the whole balance of the loan to a repayment

All of this also depends on how long the endownment has been running as to what it's present worth is
Of the three options I'd favour the second but not knowing all the details run it by a Financial Adviser, preferably Independant, because they would be able to put you more in the picture long term



Dave
 

norm

Regular member
Joined
Mar 17, 2002
Messages
10,596
dave

why are these people offering to buy your endowment?

is it not because they will make more money than they will give you for it

larry my advise is keep your endowment as it will still pay up to maybe 6% (not the 9 or 10 % that you were prob told when you were sold it) but take out a repayment for the short fall (which is a amount of the worst scenario (hopefully)

atleast then you will be ok at the end of the term

and then if your endowment pays a bit more then it will be better for you

 

Dave

Red Leader
Staff member
Site Supporter
Joined
Aug 8, 2001
Messages
61,144
Norm,

You'll always make money on an endownment long term but they cannot be relied upon to provide a set minimum amount.
Most endownments sold for mortgages in the last ten to fifteen years were sold for just that and are often refered to as 'Low Cost Endownments' as the contributions were small in comparison to a 'Full Endownment'. This made them more attractive.

Unfortunately as the price of shares has fallen, Low Cost Endownment have suffered enormously (no pun intended [;)]) and as a result because they are designed to mature at a precise time, their worth is often less than required to meet the full capital payment of the loan.

Companies that specialize in buying endownments offer a better payment than the insurance company and re-sell them to speculators/investors who gain by the head start and not having to cash it in at the end of a set term but can sit on it once it matures and until the share prices/funds, etc, are more favourable.



Dave
 

Larry

Lazarus
Joined
Dec 4, 2001
Messages
10,577
Cheer's Lad's, T
Thank's for the advice i'll digest what was said & make a descision in time not haste




Anyone who stops learning is old.
Wether at 20 or 80.
Anyone who keeps learning stays young.
Cheer's Larry AKA as toma say's Shimano Man The Tackle Tart
 

Lid

Regular member
Joined
Nov 4, 2002
Messages
2,140
If you think you were mis sold the policies in the first place you can make a formal complaint to the Financial Services Authority. There should have been the relevant forms in with the Endowment predictions you got. Apparently not many people have complained, but I reckon we all should. I've got four of the beasts and not one of them is gonna make the grade

Lid [:)]
 

Dai Fish

Regular member
Site Supporter
Joined
Dec 23, 2001
Messages
1,392
Anyone know any names of companys that buy endowment policies,
I have found myself in the same position as Larry and I am in the process of transfering to a repayment mortgage, and it would stick in my throat to keep the rubbish indowment policy I was talked into 13 years ago

Dai Fish
 

Larry

Lazarus
Joined
Dec 4, 2001
Messages
10,577
hi Dai,
Iv'e got this one Robinlloyd.com Phone 07000 222111.
Iv'e not phoned yet, just got it off our local radio.
Well it's no good complaining you can't have low inflation&low interest rate's &high return's on your investment's after all iv'e SAVED nearly 110.00 per mth on my mortgage interest repayment's over the last 3 yr's or so.

















Anyone who stops learning is old.
Wether at 20 or 80.
Anyone who keeps learning stays young.
Cheer's Larry AKA as toma say's Shimano Man The Tackle Tart
 

Dai Fish

Regular member
Site Supporter
Joined
Dec 23, 2001
Messages
1,392
Thanks Larry I will have a look at that now

Dai Fish
 

Ian C

Regular member
Joined
Dec 17, 2002
Messages
304
Hi guys,

I'd like to add to the general discussion, as opposed to answering the original query if I may [:)]

At the moment most forms of investment returns are suffering the effects of the current low inflation etc.

A low cost endowment policy which was sold when rates were considerably higher than at present, may well have been deemed to be "best advice" at that time due to the reasonable projections made by the company selling it at THAT time and under THOSE circumstances.
But, under different circumstances, such as exist today, alternatives can (and do) become more appropriate.
Here the problem becomes evident. Who knows what is going to be the state of the economy next year, let alone in 10 or 20 years time?

These things need reviewing regularly to ensure it is still the best thing to be doing.
But, who's responsibility is it to ensure they get reviewed? Yours? The insurance company? The Building Soc or Bank that sold it in the first place?
I worked for the Pru for several years, and I considered it essential for me to contact my policy holders on a regular basis to conduct a review of their situation and policies. This had a mixed reception...

Some people considered it as good service and welcomed the advice given.
Some people thought (wrongly I might add), that I just wanted to sell them another policy.
Others said they knew what they had and knew that it was ok and didn't need the review or any other policies.

Consider also a person who has several policies from different companies due to moving several times and increasing their mortgage each time. Now things can get complicated when trying to decide who's job it is to review that lot! LOL

If there was one thing that was considered the best thing to have under all circumstances, we would all have one. But we all have different circumstances, so its highly unlikely that such a thing will ever exist.

The next time your insurance company rep, bank, or building soc get in touch to say they would like to review your finances, think hard before you answer [:D]

Ian C
 

Dai Fish

Regular member
Site Supporter
Joined
Dec 23, 2001
Messages
1,392
I fully accept what you say about responsibility to check being mine, what realy gets me is that I did not want an endowment mortgage to start with, the thought of owing the same amount at the end of term as at the start did not make any sense to me, I was talked out of having a repayment mortgage after bieing blinded with figures (those of you that know me will understand how easy that was lol).

If I could get hold of that person today I would make sure his voice went up a few octaves. The position I am in is this, bieing disabled and unable to work, my finances are very tight, and the only way round this seems to be to change to the type of mortgage I wanted twelve and a half years ago and extend it by another ten years, so yes I am bitter

Dai Fish
Be nice to your kids because its them that pick your nursing home!
 

Ian C

Regular member
Joined
Dec 17, 2002
Messages
304
quote:Originally posted by Dai Fish

I fully accept what you say about responsibility to check being mine, <snip>

Hi Dia Fish,
If your reply was to me, I wasn't aiming my post at you, but trying (in my own inadequate way) to paint a bigger picture. I'm not the type who tries to pick fault or lay blame [:)]

I can fully sympathise with you and as I'm no longer in the buisness, I'm affraid I cannot be of much help now, other than to suggest we all review our finances regularly.

I know for sure that one client was particularly glad that I took the time to go and see him and review his situation and its a good example of how a review can be of benefit...

All this guy had with us at the time was his contents insurance. It had been running since before I started with the company (for about 6 years if I remember rightly). His sum insured was low, as when he took out the policy originally he lived in a flat and didn't have much in the way of possesions. By the time I got to him, he'd married, moved into a three bedroomed house and had children.
Obviously, the sum insured (which was index linked), had failed to keep up with all the things he'd had to buy as a result of his personal changes and he was under insured big time!!!
So, I advised him that he ought to consider upping his sum insured to a more realistic value. A couple of weeks later he'd thought about it and agreed and that was that.
About a year and a half later I got a shock when I was in the same road and saw a fire engine outside his house. The place was a right mess and all the upstairs stuff was very badly damaged. I contacted the company on his behalf and a claims assessor went round the next day. He was paid out in full within a very short period.
If we hadn't sat and done that review he would have recieved a pitance!
Basically, if he had only been insured for 25% of the value of his contents and he had a claim of X, then he'd only get 25% of X!

I realise this went off the original topic posted, but thought that if just one person could benefit from it, it was worth adding to the thread [:)]


Ian C
 

Dai Fish

Regular member
Site Supporter
Joined
Dec 23, 2001
Messages
1,392
Hi ian I was only pointing out what happend in my case and certainly not aiming at anyone, and I agree with your coments about house insurance and the need to keep policies up to date this is something I have always done (had my contents with the pru for the past 20+ years) I just feel very angry with myself as much as anyone for allowing myself to be in this position. I am not a well educated man but I pride myself with having common sense and almost always sticking to what I think is the right path for me, this is one of those times I did not.

Just letting off a bit of steam no offence ment to anyone

Dai Fish
Be nice to your kids because its them that pick your nursing home!
 

Geoff P

The MOGerator
Staff member
Site Supporter
Joined
Dec 2, 2001
Messages
15,489
Dai

Unfortunately you are one of many who were given bad information by poor representatives. A lot only sold mortgages, insurances, and pensions for what they could initially gain from them, with no thought for the end user. In saying that I do not wish to tar every vendor with the same brush.

I sincerely hope things turn out ok for you and your family, mind you could have lived in that estate on the hill!!!!!(Heaven forbid)

Geoff

Clean Banks Campaign member
 

anyexcuse

Regular member
Joined
Dec 23, 2002
Messages
415
I've done a similar action to Norm. I originally took out a 37000 interest only mortage with an endowment policy(EP) to cover the repayment of the capital.
In my case recently, I was told by the EP company of three scenarios where I would be 16000 short, 9000 short & 25 short on a 37000 mortgage depending on the rate of return on the EP.
On advice from a friend in stocks & shares, I took out a repayment mortgage on the 16000(worst case scenario),converted my 37000 interest only mortage to a 21000 one and i'm now actually paying less in repayments.
The principle is simple. You know from the forecast that your policy will pay out 21000 if things are really bad(4% growth).You are therefore 16000 short. You cover this with the 16000 repayment mortgage which guarantees to pay this like a standard personal loan.You then only need an interest only mortgage for 21000 to cover the endowment policy.
If rates of return are more than the lowest growth scenario, at the maturity of the mortgage you will actually have more money that you need to pay off the capital. So you will have a little lump sum just like they promised you when you originally took out your endowment policy.
Whatever you do, dont cash in your EP in panic especially if you have already paid into it for a few years.There's no need to with the above system.The existing EP also gives you full life cover of the full amount of capital you have borrowed if you accidently fall into your pond and dont come back up again.Even if you decide to convert fully to a repayment mortgage, you still have to have an element of life cover.Otherwise, if anything should happen to you, your nearest and dearest will still owe what is left of your mortgage if there's no life cover.

Hope this helps


Dave@Brynmill&DistrictAC
 

Larry

Lazarus
Joined
Dec 4, 2001
Messages
10,577
hi anyexcuse,
Your scenario from EP co is almost identical to mine except my own mortgage is for 45,700 my worst scenario with endowments,was for 14,750,so would that leave me wanting a repayment mort for 14.750 & an interest only mortgage
for 31,000 is that correct.
i like the one i think i'll contact my mortgage co &ask them if i can change to this format.
Also thank's everybody who contributed with help.




Anyone who stops learning is old.
Wether at 20 or 80.
Anyone who keeps learning stays young.
Cheer's Larry AKA as toma say's Shimano Man The Tackle Tart
 

norm

Regular member
Joined
Mar 17, 2002
Messages
10,596
thats correct mate

thats wot i did

by the way check out abby nat mortgage (2 year fixed deal they will sort everything out and they are the cheapest i just in the process of doing mine now

 
Status
Not open for further replies.
Top