Adviser warns endowment backed mortgage holders to seek advice
By NigelB | Friday, February 08, 2013, 11:26
A Cornwall-based mortgage adviser is warning people who still have endowment backed mortgages to have them reviewed as soon as possible.
'Over a million people with 25 year endowment mortgages could find themselves short this year.' - Ronan Marrion
The interest-only mortgages have hit the headlines in recent years after it was discovered many policyholders could lose their home due to a shortfall in the endowment.
It is estimated that more than a million people took out the 25 year mortgages in 1988 and could potentially find themselves short this year.
Ronan Marrion, mortgage adviser at Truro and Wadebridge based independent financial advisers, Worldwide Financial Planning, said: "Endowment backed mortgages were incredibly popular in the 1980s and 90s.
"People were attracted to the plans as they would pay interest only each month, while saving money in an endowment policy.
"Often they were told that at the end of the 25 years they would not only have earned the money to pay off the capital value of the house, but they would also be left with a lump sum of cash to do with what they want.
"This was very attractive to people who were probably dreaming of foreign holidays and a leisurely retirement.
"But 25 years on in, 2013 is going to be a set of problems for a number of people."
The Financial Services Authority anticipates that a total of 1.3 million people have endowment backed mortgages that will mature between now and 2020.
Ronan added: "There are steps that people can take to mitigate against the loss, but they need to be speaking to an independent financial adviser or mortgage adviser as soon as possible to ensure it can be resolved and they can have some peace of mind."