Newspaper article The Evening Standard (London, England)

Act Now to Soften the Shortfall; THIS IS MONEY

Newspaper article The Evening Standard (London, England)

Act Now to Soften the Shortfall; THIS IS MONEY

Article excerpt

Byline: HELEN MONKS

Sick of hearing about the endowment crisis? Well, it won't go away and you should do something about it. Helen Monks tells you how

CRASHING stocks mean more of London's endowment mortgage borrowers are facing the agony of not being able to pay off their home loans.

Monthly payments into eight million UK endowment mortgages are invested in the stock market, with the hope that the payout at maturity will cover the debt with room to spare.

That's fine when markets are doing well, but on the brink of the longest bear market in history, negative stockmarket returns will leave borrowers facing serious shortfalls. The continuinglows have pushed an estimated 60 per cent of endowment policyholders into the shortfall danger zone.

The Consumers' Association (CA) reckons millions of these policies were mis-sold by advisers, many of whom promised their clients that the endowments were guaranteed to cover their mortgage.

Borrowers' misery is not helped by the failure of the Financial Services Authority (www.fsa.gov.uk) to review mis-selling, which led the CA last week to launch its Endowment Action plan (www.endowmentaction.co.uk).

The campaign aims to help endowment holders find out if they are entitled to compensation for mis-selling and, if so, to help them claim.

So what can endowment borrowers do to help themselves?

If your endowment is not on track, you should have been told about it in writing by your provider. If they haven't, check how long both the loan and the endowment policy have got left to run, then contact the adviser or firm that sold you the policy. Ask them to work out whether it is still on target to repay your mortgage.

If it looks like there might be a shortfall, don't cash in or stop making your payments without taking advice.

There are often high charges in the early years, so if your endowment policy is only a few years old, the amount you would get back may be less than the payments made.

Look at ways of topping up your savings. …

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