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© Copyright 2007
www. Remortgage Supermarket .co.uk ~ All Rights Reserved.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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The Impact Of Endowment ReMortgage On Your House
Loan
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Just a few years ago when
the stock market seemed to only know how to rise, many
insurance companies adopted a new and innovative
business model. They sold endowment mortgage policies to
help people finance their homes. In theory, the system
was simple…
An endowment remortgage policy is a novel life insurance
policy that runs for 25 years typically. A person taking
this policy pays the interest on the home loan amount
besides paying premiums to keep his policy in force.
When the policy matures, the survival benefit (invested
in the stock market) would have grown to cover the
principal amount borrowed.
No asset manager can ever guarantee that the policy
would be able to cover the amount you have borrowed.
Therefore, such policies themselves had two options -
one where the company guarantees your money and charges
an extra premium and another where you bear the risk.
Everything went well while the stock markets rose.
However, of late this has not been the trend and it has
caused many insurance companies to re-assess whether
they can manage to meet their projections.
As a consequence, many homeowners have been getting
letters from their insurance companies advising them of
this unsavory fact. Many homeowners are left with no
option but to take corrective measures as early as they
can to reduce the possible impact of this reality.
You have a few options to choose from. You could sell
your policy and either repay part of the mortgage
quickly or re-invest in a more profitable venture. You
could (if your resources permit) take out an additional
policy to cover the shortfall. Another option is
switching to a repayment mortgage. All the options
outlined above have some complexities caused due to the
change from life insurance to remortgage. It is best if
you take professional advice on how to go about it in
the best possible manner.
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