Thousands of people who set up endowments to pay off their mortgages are finding that the policies are not performing anything like as well as they had hoped or been led to believe.
We asked you to tell us your experiences and the following is a selection of your replies.
We took out an endowment policy on our first house in 1981. We were advised that this was the best way of getting a mortgage quickly. In February 1988, having moved house, we cashed in that policy and started again ( the cash-in value helped with the deposit on the new house)We are now facing a shortfall of between £10-£16k on a £44k mortgage. Our mortgage broker is no longer in business and because we took out the policy before April 1988, we cannot call on the Financial Servcies Compliants procedure. At no time were we told that we may not have enough to pay off the mortgage. Only the amount of bonus was in question. We feel very aggrieved by the situation, particularly since Friends Provident are still promoting Endowment mortgages on their website and have made huge profits this year.It seems that we have to simply accept the fact that we were conned
Anne , UK
I received a letter saying my endowment would be 25% short on maturity just two years after taking it out. If that isn't mis-selling or mis-leading investors I don't know what is. This should be addressed in the same manner as the pensions mis-selling and tackled across the industry rather than leave individuals to pick to the extra costs.
Richard Parkin, UK
My £30,000 endowment is forecast to be short by over £11,000. It's ridiculous to blame the buyer. The lenders are supposed to be the financial experts so we rely on their advice. I was warned that endowments "might" fail but was told this "rarely happens" and "is only likely to fall short by a few hundred pounds". To add insult to injury, as my current lender has screwed up, they now want to charge me for moving my mortgage elsewhere.
We took out an endowment mortgage in 1992 which was supposed to mature when I was 69 and my husband was 66! After eight years we checked with the insurance company which said we had a shortfall and recommended putting more money in. We argued that they shouldn't have been sold the mortgage in the first place because repayments carried on into our retirement. They gave in and paid us £25,000 compensation provided we cancelled our policy. We did and now have a repayment mortgage which will be paid before we are 60. So don't believe what the insurance companies tell you, get investigating and shop around for a new way of paying your mortgage.
Susan Buddle, England
Hambro Countrywide wrote to me and my husband last year to inform us that our nine-year-old endowment policy would be between £15K and £25K short of paying off our mortgage. They then wrote to advise us that they would be increasing our monthly payments to cover the possible shortfall. I refused this and my husband and I have decided to convert our whole mortgage to repayment and will possible sell the endowment policy next year. We have no intention of throwing more good money after bad!
Angela Davies, England
I was informed that the endowment would shortfall between £4k to £16k. At the point of sale I was told it would mature, pay off the mortgage and have an excess of £20 to £40k. It seems the amount I get back is almost equivalent to the sum I have put in. The company also told me when I enquired about it that they are producing a product that would aid us in making up the shortfall. This information is still yet to come (3 years on). My intention is to change the mortgage and pay off some at the point of re-mortgage, to reduce the shortfall over a greater period. Some companies have stated they will meet the cost of the mortgage repayment at the due date. If this company has as good as said it was wrong to overstate the payback, why is it all the others are blaming the customer for not pulling out due to their misinfomation. And why are those like me not covered under the trade descriptions act, the products sold (endowments) are not as described! i.e. to pay off a mortgage! Why is the government not doing more to resolve this? I bought my endownment on the sales pitch, I didn't know much about finance at the time and relied on the sales person. I feel duped!
David Allen, England
I have an endowment policy from Sun Life which I took out in 1992 (via the Woolwich) to pay for a £38,000 mortgage. The estimated figure that this would reach a couple of years ago was £25,000. Now I imagine it is nearer to £20,000. Frankly it was a con. If I had known that the the only reason I was being sold it was that the agent would get a large commission then I would have thought twice about it. I really only wanted a repayment mortgage anyway, but was very naive. We will not be compensated because the financial industry will just look after its own. Farcical.
Tim Mitchell, ENGLAND
I discovered recently that I would have been better off putting my money into a current account. The current value of my endowment is actually lower then the amount I've invested. The advice I was given when I took out my mortgage was that this would enable me not only to pay off my mortgage but would most likely give me a little extra. Mortgage and savings organisations should only advocate savings plans with a fixed return that guarantee the mortgage will get paid at the end of the day.
I was shocked when I got a letter from my endowment company saying that my endowment (which is only £54,000) could be £18,000 if investment returns were at the lower end. When I got my mortgage I didn't want an endowment policy but the usuall hard sell of estate agents pushed me into taking one, I was never happy about it. It's very well telling people not to panic and to start new savings plans but it's the investment companies again who will be making more money out of our bad luck. Why aren't these companies offering commision and charge free policies for customers who have these problems?
Even though I was told that my endowment policy would provide me with a £30,000 lump sum at the end of 25 years, I cannot prove I was told this. In 1991 when I bought my property it was almost impossible to find a repayment mortgage, endowment policies were being pushed and pushed. Due to the underperformance of my endowment policy I now find myself with about a £6,000 shortfall and my property is not worth what it was when I bought it, by about £5,000. I feel cheated, as I did what the Government asked i.e. bought my own property, took out an endowment mortgage etc. and I find myself unable to move (not an issue at the moment, but it may become one) because of negative equity, and unable to change my mortgage company, no-one will take me on, I've tried. These figures may sound small but are having an impact. I almost wish I'd gone for a council house!
Julia Finegan, England