I don’t know of any endowment mortgage that has made the return promised at the time it was sold, however this doesn’t solve the problem.

I was told my endowment was expected to make a shortfall of around £5,500.00 and was offered the opportunity to increase my monthly premium to make this up. Mmmm, you can’t make the original plan work so you want me to give you more money to see that probably fail as well? Don’t think so pal!

In my case I simply used the amount I was recommended to overpay on the endowment, to pay off the capital sum. In the end my shortfall was in fact £1500.00 and everything would have worked out just about right if I hadn’t had to remortgage due to divorce.

I now have a new 25 year repayment mortgage, which I am again overpaying to bring down the capital sum. Clearly an awful lot depends on personal financial circumstances, but if your mum can afford to overpay I would recommend doing so. Leave the repayment mortgage alone, this will sort itself out. If you have spare cash, dumb statement in the present financial climate! use it to pay more off the endowment capital sum. The more you pay off, the lower the capital sum and therefore the lower the interest charged on it. You may not see much of a difference to start with but it makes a big difference over time, with a snowball effect. Again depending on financial circumstances, if your mum has some savings, it may be worth using some of this to pay extra off the endowment. Don’t use all the savings though; you never know when you may need to fall back on them. But with savings interest so low and the mortgage interest considerably higher, it would make sense to use some of that money, which will in effect save you money at a better rate than the savings would otherwise return.

I know it doesn’t work quite this simply, but, £7000.00 over 7.5 years is £77.78 per month. If your mum can afford to overpay that or more she will have no problem.

I have been lucky enough to pay roughly two and a half times my monthly repayment each month and have paid off just shy of half my mortgage in a little over 3 years. Add to this the falling interest rates; my monthly payment required by the bank has fallen to about a quarter of what it started at. If I can continue to pay the same amount, I will pay off a 25 year mortgage in 7 years and save a fortune!

Hi,

trying to help my mum get the best deal for her retirement after having been given some of the worst advice in mortgaging history!

She is 58 and has two mortages with Alliance And Leicester, it's a long story ....

The first is a repayment type with £7,900 oustanding and 7.5 years left of the term.

The second is an endowment, interest only type with £24,000 outstanding. The endowment has a forecast shortfall of about £7,000. The term left is also about 7.5 years.

Both mortgages are on A & L's SVR rate of 4.99%. I looked at her mortgage statement for last year and she had been paying the 2008 SVR of 7.2%!

She complained a few years ago about being missold the endowment (she was a single mother with two children at the time of selling!). She received £3,000 which she put in an ISA and with additional saving has accrued a total of £7,000.

She would like to retire at the age of 60, and will receive an NHS Final Salary pension of approximately £9,000/year plus a £20,000 lump sum.

It seems like it is impossible to get a re-mortgage for outstanding amount under £25,000 which her endowment mortgage is.

A&L charges £295 early redemption charges and has terrible interest rates. Should she try and pay off the repayment mortgage now and rearrange the endowment mortgage with someone else? Or is it better to overpay? Or just wait until retirement and pay the lot off in one go.

Thanks!

Donovan.