mortgage advice needed (boring, I know...)

[eddm]

We're moving but our mortgage adviser has screwed up and got us an interest-only mortgage to cover the new place. Too late to change provider now, and stung by previous endowment. Does anyone have any advice on the best way to cover the repayment bit? ISA? something else?

surely if it is his mistake, you could complain/appeal/ or something else to get what you really want?

I thought "interest-only" meant an endownment mortgage, is it something else? Explain, & educate me?!

I am quite reticent when it comes to mortgages, particularly in light of the endowment situation. I wouldn't want to go for an ISA mortgage because again, you have no guarantee that you will have enough equity at the end to pay off your mortgage. Have you thought about getting a fixed or discounted rate repayment mortgage? There are some good deals around normally. To give you an idea, go somewhere like this Hope that helps..

Ok, I went surfing to research it, and understand now. If you truly can't get out of the deal you currently have, it does look to me like an investment ISA is your best bet for a single product (I AM NOT AN IFA, btw!). But you will have to read & think on it. I think I would want to do some cash, and some mixed investments, including stocks & bonds. You could try one of the comparison websites (Moneysupermarket?) to see if someone is doing an ISA product that invests in mixed cash-bonds-shares products. Pension mortgages get slated here ...

Thanks! Think I panicked a bit when saw letter from solicitor, have now checked with mortgage adviser and they say must be an error but are checking for me. V. cautious as we got stung on an endowment we've been paying for 14 years and now supposed to be worth only half what it should be... If anyone else has an endowment, I can recomend (sp?) EndowmentAction website shows you how to complain re mis-selling.

Wey hey something I can answer!

Zebra an endowment mortgage is one type of interest-only mortgage. Other potential repayment vehicles are pension, ISA or straight forward savings. Basically anything that will give you a lump sum at the end of the term to repay the original capital you borrowed.

The only mortage guaranteed to repay your capital and interest is funnily enough a repayment mortgage - none of the other supply guarantees.

Endowments per se are not bad ideas the issue is where you have take a 'low-cost' endowment with a projected value suitable to clear loan but a guaranteed value of much less. You could take an endow with a guaranteed value of sufficient to clear loan but depending on circumstance this can be v.expensive.

Eddm - in your case you should have been supplied with a copy of the 'fact find' undertaken by the adviser and he/she should have been guided in product choice based on the information in that. If you can prove they have recommended the wrong produce then you can seek to have this rectified. For example they would have to cover all costs involved in redeeming this mortage.

On a practical level all I can suggest is you place some money into and ISA (remember you can both have an equity maxi-ISA and save upto to £14,000 per year based on current contribution levels (although due to change) but this has a degree of risk also as it is based on stocks and shares. Cash ISAs offer a fairly low rate of return and often better deals can be found in straight forward savings accounts, also contribution levels are lower. You could also try a unit or investment trust - again equity based with a risk level. And remember you can change mortage again as soon as your tie-in period is up. I a presuming you have one as if you didn't you could just change to a different deal as you wish.

it may also be worth approaching your mortage provider and explaining the situation - you mmay find they are helpful and will allow you to swap to a repayment product without penalty - as long as they are keeping your business they may be happy.

Please feel free to come back with any other questions or if I haven't made myself clear.

Cheers

Gomez sounds well-sussed on these things.
I think the problem with endowments was the front-loading on charges, and high charges in general. Plus unsuitability, risk of not being enough upon maturity (ok, a lot of problems, really!) A CAT-standard ISA should be better, but still not a safe bet, right? But I'm fuzzy how would you get an ISA-product to pay off your mortgage as a separate product from the interesting-only mortgage?? Boy I hope it was just a clerical mistake on the letter for your sake, EDDM!