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Private Label offers Windfall for endowment policyholders

Private Label believes its new flexible mortgage could solve the endowment cri-sis for policyholders who are being asked to pay out higher premiums.

The mortgage packager says flexible mortgages were originally introduced to meet the needs of borrowers who wanted to pay off their mortgage early.

But Private Label says it is becoming harder for borrowers to overpay on their mortgage as property prices soar. This means they lose the benefits of having a flexible product.

Its new Windfall mortgage pays borrowers a windfall on redemption after five years. This increases by 1 per cent each year from 5 per cent after year five until year 15 when borrowers receive a 15 per cent windfall.

Private Label suggests borrowers with endowments might be able to switch to the product and use the windfall to fund any shortfall in their policy.

But it says borrowers with endowments must be careful they are not hit by a redemption penalty from their current lender before deciding to make the switch.

Director of marketing Tony Fisher says: “Subject to careful case-by-case compliance scrutiny, this product could be of benefit to those facing endowment shortfalls.

“Instead of increasing premiums to be sure of repaying the mortgage, some borrowers might be able to maintain the same premium because the mortgage will reduce on its own.”

The mortgage is penalty-free at all times, with daily interest charges and a 1 per cent discount for the first six months, making the initial rate 6.78 per cent.

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