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IFAP gives facts on endowments

IFA Promotion has produced a consumer factsheet designed to dispel the

myths about endowment-linked mortgages.

Its publication follows the recent BBC Panorama programme about mortgage

endowments although IFAP says it was working on the factsheet before the

documentary was broadcast.

The factsheet, Confused about Endowments?, explains how the plans work in

a question and answer format.

It deals with the endowment review and what borrowers should do if their

endowment is unlikely to cover their mortgage. It explains the options

available to borrowers in this situation and details the implications and

potential costs of each option.

The options suggested include increasing the endowment premiums, taking

out a new policy, converting the mortgage to a repayment loan, investing in

an Isa or making a lump-sum payment to reduce the mortgage debt.

The factsheet will be available to the 36 product providers which sponsor

IFAP. They will be able to send it out to their customers. IFAs are also

being encouraged to use the guide to explain the issue to their clients.

Full details of the factsheet will also be accessible on the IFAP website.

Acting chief executive David Elms says: “There are a number of options

available to those whose endowment may not meet their mortgage liabilities.

Providers are not able to advise customers about which option is best

suited to individual circumstances, so seeing an IFA is vital if people are

to make the right choice.

“We wanted to make sure the factsheet was available to consumers who do

not know which way to turn and to product providers which are corresponding

with their custo-mers about endowments.”

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