Thanks
to lower than expected stock market investment returns, most of
the UK's eight million or so endowment
mortgage holders are unlikely to make enough from their policies
to clear their mortgage debt.
The average shortfall is currently just over £7,000, but for many
it will be far higher.
• Start a new investment
You could make up the difference by starting some other kind of
savings or investment vehicle, such as an Isa (individual savings
account).
However, here again you will be relying on outside factors investment
performance in the case of an equity
Isa, and interest rates with a cash ISA and, as weve
seen, this is inherently dangerous.
• Convert to repayment
The only way to ensure your mortgage will be paid off in full
by the end of the mortgage
term is to convert from an Interest-only
to a repayment
loan.
This is a relatively straightforward procedure, but it will increase
your monthly payments.
However, you don't have to change your whole debt.
Many mortgage
lenders will allow you to convert a portion of what you owe
to a repayment basis, leaving the rest interest-only.
This will help keep the cost down.
And if you remortgage to a better
deal at the same time, you could find it doesn't actually cost
you any more.
(If it does, if necessary, you could free up the extra cost by
stopping payments to your endowment policy).
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