addictfreak
Guru
- Location
- Boldon, Tyne and Wear
Globalti said:
Well no doubt, you listened to the 'experts' as most of us did. All sounded very plausible at the time.
Endowment Policy Bloody Cheek
- Thread starter kettle
- Start date
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Well no doubt, you listened to the 'experts' as most of us did. All sounded very plausible at the time.
My endowment will come up short, but rather than increasing my payments into the plan as the provider kept bothering me to do, I made other arrangements and now have plenty of money to cover the mortgage. I could never work out the logic of selling a plan early, it was just more advice from people who stood to make commission if you did so.
Fnaar
Smutmaster General
- Location
- Thumberland
Is this the right place for "well-endowed" double entendre? 
Chrisc
Guru
- Location
- Huddersfield
My policy is going to fall well short as well but I never bothered to increase the payments as they kept badgering me to do. I could never see the pint of giving them more of my hard earned when they'd so spectacularly ballsed up what they were already getting.
My philosophy has always been that I'll simply convert whatever the shortfall is to a repayment at the level of repayment I'm currently comfortable with and pay it back as quick as poss. Looks like adding 3 years to my mortgage run so I'm not too worried.
Also agree that there's no point n cashing one in with a couple of years to run and wasting the terminal bonus.
Would have been nice to be looking at a profit tho eh? All those bikes waiting to be lined up in the garage!
My philosophy has always been that I'll simply convert whatever the shortfall is to a repayment at the level of repayment I'm currently comfortable with and pay it back as quick as poss. Looks like adding 3 years to my mortgage run so I'm not too worried.
Also agree that there's no point n cashing one in with a couple of years to run and wasting the terminal bonus.
Would have been nice to be looking at a profit tho eh? All those bikes waiting to be lined up in the garage!
Globalti said:
I took my first mortgage out in 1981, and i was under pressure to take out an endowment mortgage. I gave it a bit of thought and decided against it on the reason that if the economic situation went tits up, the mortgage rate at the time was around 16% the endowment would be not up to the job of paying off the capital. As it turned out i was correct, and many people have found that they have not got the money to pay off the loan.
Maybe I was lucky and guessed correctly, my mortgage is now paid up and i am free of the burden, but a few of my friends are still trapped, even after going to the ombudsman and arguing their case.
JtB
Prepare a way for the Lord
- Location
- North Hampshire
When I got my first job nearly thirty years ago and was about to buy my first house, the estate agent almost persuaded me to take out an endowment mortgage. I nearly fell for it, but my boss at the time provided me with some challenging arguments for the estate agent which quickly revealed it to be a big con with the estate agent (and his lies) being driven solely by commission.
The best decision I ever made was to take out a traditional repayment mortgage and to keep control of my own finances rather than pass control over to some suit in the city with a calculator.
Even if the endowment mortgage had turned out to be everything it was cracked up to be (which I knew it wouldn't), the repayment mortgage would still have worked out to be more cost effective. By paying off a bit of extra capital in the first few years you can drastically reduce the overall term of the mortgage thereby saving thousands in interest.
As they say, you don't get 'owt for nowt' in this life and that was exactly what the endowment mortgage was cracked up to be.
The best decision I ever made was to take out a traditional repayment mortgage and to keep control of my own finances rather than pass control over to some suit in the city with a calculator.
Even if the endowment mortgage had turned out to be everything it was cracked up to be (which I knew it wouldn't), the repayment mortgage would still have worked out to be more cost effective. By paying off a bit of extra capital in the first few years you can drastically reduce the overall term of the mortgage thereby saving thousands in interest.
As they say, you don't get 'owt for nowt' in this life and that was exactly what the endowment mortgage was cracked up to be.
Globalti
Legendary Member
Mine will be used to repay part of the endowment mortgage; we will convert what remains to repayment and then increase the monthly payments by the same amount as the premium I've paid every month for the last 25 years plus whatever interest the repayment has saved us.
Luckily our mortgage is in two loans anyway and the more recent is a repayment mortgage, we've been able to knock about £3500 off it these last few moths with interest rates so low by just overpaying what we've saved.
Luckily our mortgage is in two loans anyway and the more recent is a repayment mortgage, we've been able to knock about £3500 off it these last few moths with interest rates so low by just overpaying what we've saved.
endowment mortgage salesmen were the spawn of Thatcher - shiny suits, skinny ties, shifty when you asked them if they had an interest in selling you this stuff.Globalti said:
I agree that they made you fell old-fashioned, but it was so, so obvious that they hadn't a clue about the risks that I didn't give it a second's serious consideration. And quality newspapers were scathing about endowment mortgages.
BigonaBianchi
Yes I can, Yes I am, Yes I did...Repeat.
- Location
- Iskele TRNC & Mordor UK
Interesting..
A low cost with profit endowment (which I am guessing is what is being discussed here) would never have had a written guarantee of it growing enough to repay the debt. It would have been sold (should have anyway) with a set of illustrations/quotes based on ASSUMPTIVE rates of return over th epoeriod of the mortgage. It would have had a clear statement that thos erates were assumptive and NOT GUARANTEED. The alternative would have been to use a full cost endowment (or repayment..better) which would have been likely prohibitively expensive. Anothe rtype commonly sold was a low cost low start endowment (even worse). Also the reliance ona 'possible' but not guaranteed level of terminal bonus should have been a concern to a risk adverse investor. (Erm nobody go cashing in a LCE early without checking the surrender value first though ok!!)
Whilst I do not doubt that the LCE were heavily pushed because they carry higher commission rates than say a repayment with a simple term or reducing term policy...they are and always were plans that carried the risk of a shortfall, and that would have been clearly stated in th ekey features documentation supplied pre sign up.
One thing that did happen a lot was the assumption on the part of the salespeople that the mortage and the LCE were linked. hence the term endowment mortgage I guess. To many people were 'misled' simply by not even being presented with arepayment option. That was wrong. However many took on a LCE simply because they were prepared to take on th erisk of a shortfall in return for the potential of lower payments and a potential excess on th epolicy after repaying the loan. In othe rwords this was a risk many chose to take in full knowledge of the possible shortfall.
Getting compensation was an option..I am unsure if cases of LCE miselling are still being considered by the ombudsman or not?? In any event I think the burden of proof lay witht he client to show that they were misold. That can be tricky given that much of the sale would have taken place verbally many years ago. There should have been a fact find completed at the time by th eadviser and signed by the client along with the applications and key features documents etc. If that fact find cannot be provided or shows that a repayment option was not even considered for example then some redress might be possible?? Also if there is now record of the keyfeatures docs being recieved pre sale by the client??...in short it's a case of never sign anything until you read and UNDERSTAND what you are signing.Its a shame, because you'd think that some elemant of fair play and trust/honesty would enter into it..after all we go to advisers because theya re the experts right? Wrong they are mostly salesmen under a LOT of pressure.
It's pig and I really feel for those caught up in this debacle. I dont blame the advisers either, but do blame the greed driven fat cat target obsessedbastards'managers' at the time.
JMHO..
as a guitar playing long haired cyclist
A low cost with profit endowment (which I am guessing is what is being discussed here) would never have had a written guarantee of it growing enough to repay the debt. It would have been sold (should have anyway) with a set of illustrations/quotes based on ASSUMPTIVE rates of return over th epoeriod of the mortgage. It would have had a clear statement that thos erates were assumptive and NOT GUARANTEED. The alternative would have been to use a full cost endowment (or repayment..better) which would have been likely prohibitively expensive. Anothe rtype commonly sold was a low cost low start endowment (even worse). Also the reliance ona 'possible' but not guaranteed level of terminal bonus should have been a concern to a risk adverse investor. (Erm nobody go cashing in a LCE early without checking the surrender value first though ok!!)
Whilst I do not doubt that the LCE were heavily pushed because they carry higher commission rates than say a repayment with a simple term or reducing term policy...they are and always were plans that carried the risk of a shortfall, and that would have been clearly stated in th ekey features documentation supplied pre sign up.
One thing that did happen a lot was the assumption on the part of the salespeople that the mortage and the LCE were linked. hence the term endowment mortgage I guess. To many people were 'misled' simply by not even being presented with arepayment option. That was wrong. However many took on a LCE simply because they were prepared to take on th erisk of a shortfall in return for the potential of lower payments and a potential excess on th epolicy after repaying the loan. In othe rwords this was a risk many chose to take in full knowledge of the possible shortfall.
Getting compensation was an option..I am unsure if cases of LCE miselling are still being considered by the ombudsman or not?? In any event I think the burden of proof lay witht he client to show that they were misold. That can be tricky given that much of the sale would have taken place verbally many years ago. There should have been a fact find completed at the time by th eadviser and signed by the client along with the applications and key features documents etc. If that fact find cannot be provided or shows that a repayment option was not even considered for example then some redress might be possible?? Also if there is now record of the keyfeatures docs being recieved pre sale by the client??...in short it's a case of never sign anything until you read and UNDERSTAND what you are signing.Its a shame, because you'd think that some elemant of fair play and trust/honesty would enter into it..after all we go to advisers because theya re the experts right? Wrong they are mostly salesmen under a LOT of pressure.
It's pig and I really feel for those caught up in this debacle. I dont blame the advisers either, but do blame the greed driven fat cat target obsessed
JMHO..
as a guitar playing long haired cyclist
nigelb
New Member
- Location
- Just west of Cambridge
Well, at the time, a low cost endowment mortgage made it possible for us to buy our first flat (other options cost more than we could actually afford).
Several times we were sailing very close to the wind, and an extra few quid every month could have been catastrophic.
Now, coming to the end of the term, there will indeed be a shortfall (having had years of "there's no prob, we've done well" its become "you have a problem, you must act now!) but as others have said, I am better places now to deal with it.
You just have to remember that all these people are out to make money from us - none of them have our best interests at heart.
Nige
Several times we were sailing very close to the wind, and an extra few quid every month could have been catastrophic.
Now, coming to the end of the term, there will indeed be a shortfall (having had years of "there's no prob, we've done well" its become "you have a problem, you must act now!) but as others have said, I am better places now to deal with it.
You just have to remember that all these people are out to make money from us - none of them have our best interests at heart.
Nige
summerdays
Cycling in the sun
- Location
- Bristol
I was definitely financially naive when we took out our endowment mortgage ... and yes they tried to get us to up the amount we paid. We instead upped how much of the interest we paid and so have been gradually paying it off that way.
andyoxon
Legendary Member
- Location
- Punxsutawney-on-Thames
kettle said:
Last year, after putting the mortgage on 100% repayment, we finally cashed in our 14yro (out of 25), Std Life endowment in as it too had a massive shortfall predicted. We took out decreasing term assur. which was cheap. Because SL were worried about the economic climate we took a £2K or so hit, and didn't quite get back what we'd even paid in.
Still.
