Standard Life endowment shortfall
800,000 Standard Life with profits policy holders have seen their payouts reduce by around 9%. Performance of the £41.2bn with-profits fund has been poor over the past twelve months, meaning those customers whose policy is due to expire this year, could see a shortfall between the policy value and their outstanding mortgage amount.
The fall in value comes as the final, or terminal bonus is reduced. It is this bonus that has a large impact on the final policy value. Whilst the annual bonus value remains the same, it does not carry the same weight as the terminal bonus.
The number of homeowners who face such a shortfall has increased to 87% (from 55%) of all Standard Life endowment policy holders.
The key to ensure any interst only mortgage can be paid off at the end of the term is to review the policy(ies) in place on a regular basis and to increase the premiums or make additional provision as required. Alternatively, you could start to pay off some of the mortgage as you’re going along, even if it is not as much as you would do under a capital and interest mortgage.
Whatever you do, review the situation in plenty of time. Don’t leave it to the year before the mortgage is due to be paid off to check you have sufficient funds in place.
Tags: Mortgages, standard life
