The Association of British Insurers has recently written out to 10 million endowment holders warning that the returns may not be enough to repay their mortgages.
According to the ABI, 61% of those people written to who have endowments are in the red or amber categories. Red category endowments are unlikely to pay out enough on maturity to cover the cost of the mortgage. Investment returns in excess of 8% would be required to start bringing the policy back on track.
Amber category endowments might pay out enough but extra payments are advisable. Investment returns between 6% and 8% are required in order produce the amount of money needed.
Only 39% of the letters sent out were green, stating that the endowments were on track to cover the cost of the mortgage. As long as investment returns of 6% are received, these policies should produce the amount of money needed.
If you have received a letter or are just worried about your endowment policy, don't panic. Get in touch for our help and advice.
If you are thinking of encashing a with profits endowment - why not consider selling it?
Use our regular savings calculator to see how much you may have to save to make up any shortfall.
Use our mortgage calculator to assess mortgage and remortgage costs.