Not sure if you have a shortfall?
If you have an endowment policy backing a mortgage you will have received a projection letter from your provider telling you whether your endowment is on track to pay off the capital amount of your mortgage or if you have a shortfall.
If you are not sure, check with your endowment policy provider now. If you have a shortfall you will have to meet this out of your own funds in order to repay your mortgage capital on its due date. You must put a plan in place to do this.
When to get advice
Talk to a financial adviser before cashing in your endowment or stopping any other financial plan as a way of raising funds to reduce your mortgage capital – otherwise you could lose out financially.
If you have an endowment shortfall you either need a plan to plug the gap – or to find an alternative solution.
The most important point is don’t do nothing! The problem will not go away.
See the list below for a summary of your different options then speak to your lender or a financial adviser as soon as possible.
You might be able to do the following.
Each of the methods above has benefits and drawbacks. Some will guarantee your mortgage will be repaid but could be very expensive. Others are more affordable but you could still be left with a shortfall. The most important thing is to talk to your lender or an adviser to work out your next steps.
If those options aren’t affordable, you need to contact your lender as soon as possible to discuss your situation. They will be able to work with you to try to come to a manageable solution.
A more drastic solution would be to sell your property and buy a smaller one to release funds to cover the shortfall. This is a last resort for many people and there are no guarantees that you will sell your home for a price you expect or find a cheaper property that you want to live in.
Finally, if you’re 55 or over, you could consider an equity release scheme, such as a lifetime mortgage or home reversion plan. These are complex products that enable you to release equity tied up in your home while continuing to live in it. However, they will affect the amount you leave in any inheritance, so it’s essential you take independent financial and legal advice before making any decision.
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