Your endowment
company will have sent you a letter (called a re-projection letter).
It tells you if your policy is on track to repay the target amount
(usually the same as your mortgage loan). However, even if your
policy is currently on track, it may do better or worse than
this in future. |
This
is because there is an element of risk with an endowment
policy and you need to think about how happy you are with
taking this risk.
An endowment policy is linked to the stock market (like many other investments),
so it is rarely guaranteed to pay out the target amount. The value of
the stock market can fall as well as rise. However, over the longer term,
investments based on stocks and shares have usually done better than
savings accounts. Once
you have the letter, you need to decide what action to take. |
 |
Ways
of making up the projected shortfall on your mortgage
loan.
|
If your endowment policy looks likely to pay out less that the target
amount at the end of the term |
| (known
as a projected shortfall) and you need to make up the difference
between the payout and your
mortgage loan, there are a number of ways of doing
this. You may already have other savings you could use for this
purpose. If so you should keep these under review each time you
get a new re-projection letter from your endowment company to
make sure you have enough savings. If you don’t have other
savings you can: |
- Switch the amount of the projected shortfall on your interest
only loan to repayment mortgage.
- Repay some, or all, of your mortgage loan early, either by paying off
a lump sum or by overpaying each month on your existing interest-only loan.
- Consider converting your interest only mortgage loan to a repayment mortgage, either with the same lender or a different one.
- You could consider a cash savings account, but this is only advisable
for the short term.
- Extend the term of you endowment policy and mortgage loan, where permitted.
- Top up your endowment plan.
|
