There is so much talk about the current situation of Endowment policies that it was felt best to give you some of the facts and some helpful advice.

At the moment many companies are suggesting that customers Endowment mortgages are no longer on track to repay their loans in full.

Financial Services Authority January 2000

There are often high charges made to Endowments within the early years , if your policy is only a few years old the amount that you would get back would probably be less than the payments made. You will have to find another way of paying back your mortgage and there is also the possibility that you will have to pay life insurance too.

One of the first things you should do if you think that you are in this situation is to take a look at your paperwork. You must check the end dates for the Endowment, Loan and Mortgage and check that all of these dates coincide with each other. If they do not and you find that your Endowment will not have matured by the time that you have to pay back your mortgage then you must talk to your lender and arrange, if possible, to extend the dates.

Contacting your endowment company is a must if you have found yourself in the situation that is feared by all. It is advisable to ask them to work out whether they think your policy is still on target to repay your mortgage. If your policy is near its pay out date you will get priority.

Another option for you is to look at ways of topping up your savings. Such options include :

• Starting an ISA , this way you can build up a further lump sum and put it towards paying off your mortgage.
• See if you can change part of your mortgage to a repayment loan. It would be advisable to se what the shortfall of the endowment is going to be first and see if that amount could be changed to a repayment loan.
• If you have any spare savings that could be used to make a capital repayment to your lender, which would reduce the amount of the loan. However there could be penalties included with this method for paying back the loan early.
• You could increase your monthly repayments. You must check whether you have to pay extra costs or charges for doing this.
• Arrange for the policy to be extended.
• You could take out an additional top up policy to cover what has not been paid off, however as with the point above, if you are reaching retirement can you really afford to do this?

A financial advisor is the best person to ask for advice if you are in this situation and you do not know what to do next.

For any more information contact the FSA on 0800 917 3311 or visit their website at www.fas.gov.uk/consumerhelp