to think that if you took out an interest only mortgage....

[CherylWillBounceBack]

....that the clue to how the product worked was in the title.

www.dailymail.co.uk/money/mortgageshome/article-2225427/Over-50s-mortgage-trap-cost-home.html

To be clear I'm not attacking those who fell foul of endowment policies, but those who have either taken on more than they could have ever afforded as a repayment scheme, and even more at those that have released equity from these homes to fund a 'lifestyle'. It makes me absolutely irate as a saver who has seen people bidding up the property market to insane levels using borrowed money which it turns out they had no vehicle in place to pay back. They are now claiming they didn't understand what they had got themselves into.

They are not victims of anything other than greed and stupidity, and with the media coverage they've been getting over the last few weeks, it looks like we are now we are heading towards another bailout of the profligate, at the expense of those who saw this coming years ago and have seen their savings decimated due to inflation and low interest rates.

Disclaimer, I don't own a house, I stayed out and attempted to save up for one outright only to see the prices spiral out of control and then be propped up by all manner of schemes for those who have overstretched.

To quote Paul Daniels, if there's another bailout of either the banks or those who have been feckless, I'm leaving the country.

Well, yes as long as you can afford the repayments then it doesn't matter if its 20 x your salary I guess.
But if IR went above 10% we would be screwed.
And I suspect many others :(

Hi Talkinpeace.
The start date was 1997
Monthly premium £50.50
Multipep with skandia life
And £35,000 if I'm right about what assured means.
Thanks

£48,500 ish

That's what it will pay out??

Thanks by the way

actually I just double checked a couple of formulae (that were still linked to my numbers not yours
it could be as high as £55k - BUT I suspect that £35k is high for sum assured on a £50 a month policy....

NB
My endowment was for a £30k mortgage, I paid in £28 a month BUT the sum assured was £10750 ..... and it finally paid out £22k ....

So is there serious talk about people claiming 'missell' on these and getting away with not paying. I know loads of people who have lived it up paying £100 a month while we have struggled to pay a repayment.

Wow I'm amazed.
On the statement it gives me the value of the plan at the end of 25 years on 3 different % £22,900 £35,000 and £54,700.
So do you think I should wait until it matures and not cash it in yet?

In that case your sum assured is NOT 35k
the 4, 6 and 8 are BILGE
you need to look at one of your bonus statements to get the sum assured
more likely to be around £20k on the basis of £50 a month
at which point the payout drops to around £33k

BECAUSE
the bonuses are ALL based on the sum assured and the preimum you have paid
and the sum assured will NOT be the amount of mortgage you are covering - it will be MUCH less - because the maths relied on the bonuses covering the gap....

Ok, I don't know what sum assured means, is it the minimum payout?
I'll see if I can find a full statement.
What's Bilge?

:-)
bilge as in bilge water - less than truthful shall we say ....
when I was sent those letters I asked for the formula to check it and they could not tell me ....

Aah I see, I am clearly not very financially savvy !!

they rely on making those things so hard to check that we are just happy with what we get - I aim to undermine them ....

My mother was pushed into an endowment mortgage 22 years ago, when she bought her council flat. It was her only option - endowment or don't buy.

She has known for at least the last 7 years that there would be a substantial shortfall, and has been saving like mad to cover that.

Anybody who doesn't know that endowment mortgages are likely to have shortfalls must have been living in a darkened room for the last 10 years.

Endowments are one thing, I agree that you have to be pretty thick not to know there was likely to be a shortfall at the end if the policy term because they failed to perform. But at least the people with endowments attempted to have some kind of vehicle to repay their capital. Some people on interest only don't appear to have given it a moments thought, or intended to rely on the Ponzi scheme that was the housing market pre 2008. No sympathy for them. None at all.

We have IO, with the option of making payments on the capital when we want, which we do. We bought our house on IO at a time when I wasn't working, as it had potential, and the opportunity to buy this house was too great to miss. Indeed, there could be about 500% equity in it now (is that an actual figure?!). It was worth doing because the repayment for five years or so was significantly cheaper than rental. In fact with pay back it still is. Just.

Not all who take out IO mortgages are stupid, but you must be a bit thick if you don't realise that the mortgage has to be paid back one day. Dh and I are (thankfully!) aware of this, and if we have to sell the family home in twenty years time or so, we should have enough to downsize comfortably. We've discussed downsizing now to a more affordable mortgage but figured that any appreciation might as well be made on a more expensive house that we like living in.

talkin,
started may 1992
with standard life
we pay 57 a month
according to last statement we aim to get between 25k and 29k so we have a shortfall but we have changed to a repayment yrs ago.

Hi there Doing, yes I will certainly work it out
BUT
the critical figure is the "basic sum assured" - it will be on your bonus statements

once I've run a few of these I'll post my sheet up onto google docs for all to play with
but I need to check it a few times first :-)

Have done the maths for Doing.
Sadly it was as bad as she expected.
Anybody else want theirs checked ....

I'm making the formulae robust at the moment so you can all play ....