Endowment policies used to be a popular option when choosing how to repay your mortgage. and were taken out by many people as a way to repay the capital borrowed at the end of the mortgage term.
If you are concerned about an endowment shortfall on your mortgage. then this calculator can work out how much it would cost to switch part of your loan to a repayment basis.
Will my endowment repay my whole mortgage
In order to transfer your current shortfall to a repayment basis without increasing your monthly payment, you will need to achieve a rate of: %
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What is an endowment mortgage?
In theory, the idea is simple - take an interest only mortgage and set up a monthly savings plan alongside it which is designed to deliver a lump sum at the end of term and pay the mortgage off. Sold with the prospect of a lump sum at the end of the term, they appeared to be an attractive option for many people taking out a new mortgage.
However, lower investment performance than anticipated meant many policies fell short of the growth promised, meaning people were left with a shortfall between the amount owed on their mortgage and the amount they
received from their endowment. This caused many people to have to remortgage and switch part or all of their mortgage to the repayment option, often at a time when they would have expected to be paying off the debt completely and even receiving an additional cash lump sum.
How does our endowment shortfall calculator work?
It only takes a few seconds and will tell you how much it’s likely to cost for you to switch part of your loan to a repayment basis.
Fill in the box making sure you put in the interest rate that you are currently paying, rather than the rate that you were paying when you took the mortgage out.
In the remaining term question add in the number of years left on your endowment policy, then using the most recent figure provided on your endowment providers projection letter add in the estimated shortfall figure. If you have not got this to hand your policy provider will be able to send you an up to date figure.
With these figures we should be able to work out what rate you would need to find in order to transfer your current shortfall to a repayment basis without increasing your payments.
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