Thanks to lower than expected stock market investment returns, most of the UK’s eight million or so endowment mortgage holders are unlikely to make enough from their policies to clear their mortgage debt.

The average shortfall is currently just over £7,000, but for many it will be far higher.

(For more on this, read What Went Wrong With Endowment Mortgages?)

If you’re one of them, the important thing to decide now is how you’re going to make this up.

Ways to fill the Endowment Gap

• Pay more into your policy
Despite what your policy provider may tell you, this is a risky strategy.

To find out why, see What Should I Do With My Endowment Mortgage?

• Start a new investment
You could make up the difference by starting some other kind of savings or investment vehicle, such as an Isa (individual savings account).

To read about these, go to Isa mortgages.

However, here again you will be relying on outside factors investment performance in the case of an equity Isa, and interest rates with a cash ISA and, as weve seen, this is inherently dangerous.

• Convert to repayment

The only way to ensure your mortgage will be paid off in full by the end of the mortgage term is to convert from an Interest-only to a repayment loan.

This is a relatively straightforward procedure, but it will increase your monthly payments.

However, you don’t have to change your whole debt.

Many mortgage lenders will allow you to convert a portion of what you owe to a repayment basis, leaving the rest interest-only.

This will help keep the cost down.

And if you remortgage to a better deal at the same time, you could find it doesn’t actually cost you any more.

(If it does, if necessary, you could free up the extra cost by stopping payments to your endowment policy).

For an explanation of how to make the switch, read How to change from an interest-only to a repayment mortgage

• Lodge a mis-selling claim

Of course, if it turns out you were mis-sold your endowment, you might be eligible for compensation.

To find out if you have grounds for a claim, go to Was I mis-sold my endowment?

 

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