A new factsheet, designed to inform endowment mortgage holders of their options if their investment falls short of repayments, has been published by the Financial Services Authority (FSA).The move to clarify information regarding possible shortfalls follows the results of a survey by the FSA that revealed seven out of 10 households have taken no action to find out about their options, despite receiving a letter saying that their investment may fall short.
According to the FSA, around half of those who have failed to take action claim that they no longer need the policy to repay their mortgage. But the watchdog believes that many people who are not on track to pay off their mortgage may need to urgently assess their options.
Christine Farnish, director of consumer relations at the FSA, said: ‘Making sure you can repay your mortgage loan is one of the most basic financial needs. If there is a risk that you will not be able to, and you are not comfortable with that, then now is the time to decide what to do. If you need to put more money aside to pay off your mortgage, it is a lot less painful to do it sooner rather than later.’
The factsheet, Your Endowment Mortgage ‘ time to decide, includes tips on what options are open to endowment mortgage holders and also gives advice on whether customers need to make a complaint.
The Association of British Insurers (ABI) has also launched its own Mortgage Endowment Code, providing guaranteed rights for customers to receive clear information about their policies.
Mary Francis, director general of the ABI, said that the FSA’s factsheet and the new code should help to keep customers informed.
‘I welcome the fact that consumers are being informed regularly of the progress of their investments. This enables them to check whether the current projection might result in a shortfall and take remedial action if this is necessary,’ she said.