Endowment shortfall mortgage advice

Leo Donkersley, 34, and his wife Angela, 34, from Staffordshire were paying their mortgage lender Bank of Ireland's standard variable rate (SVR) of 6.54% on a mortgage of £64,000 over a term of 17 years, paying £348 a month interest only.

As their endowments were underperforming and a shortfall seemed likely, Leo and Angela decided to switch their mortgage to full repayment. They wanted the best possible mortgage deal with few set up costs and a great interest rate, plus to increase the term to 25 years.

The Donkersleys wanted the best mortgage advice available, plus no broker fee so decided to consult L&C Mortgages.  Their mortgage adviser at L&C recommended they switch to a Halifax tracker mortgage, guaranteeing to stay at 0.45% above the Bank of England Base Rate for 2 years. With a starting payable rate of 4.95%, the Donkersley's rate has now risen to 5.20% at the time of writing due to the base rate increase. However, with their previous mortgage lender's SVR now set at 6.84%, Leo and Angela have reduced their interest rate by 1.64%!

So they have compensated for their endowment shortfall by switching all to repayment, having a lower interest rate and adding 8 years to the term (but since the new deal offers the ability to make unlimited overpayments they may be able to get rid of the mortgage sooner), and yet are only paying £33 more a month.

With no early repayment charges and unlimited overpayments, no arrangement fee, free valuation and free legals, daily interest calculation and a guaranteed rate in line with economic conditions - Leo and Angela are very happy with their new mortgage deal!

Says Leo: I was very impressed with L&C throughout, from the initial advice on what would be the most suitable product for us to the follow-up calls and paper chasing of the remortgage itself. I did feel it was proper advice and not just a guy chasing a commission payment.

See also: our endowment shortfall mortgage calculator