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Mortgage Matters: Are you making a smart move?

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4. In the late 1980s, when you bought your endowment mortgage they were all the rage and you had already planned on how you were going to spend the £30,000 surplus at the end of your mortgage term. However, the projection letters from your endowment company are saying you may potentially make a loss. Where do you go from here?



• Rather than changing to a repayment mortgage or increasing your endowment contributions, think outside the box. Many lenders allow you to do a split deal, where one part of the mortgage is interest only and the other element is capital and interest (repayment).



• For example, if you had an £100,000 mortgage and a potential £10,000 endowment shortfall, you could move £20,000 over to a repayment mortgage. This would cover the potential shortfall plus, any further reduction in the value of your policy.



• Moving £20,000 over to a repayment guarantees that the projected shortfall is covered. However, if you stay interest only, the endowment company could still come back to you and ask for more money if the fund continues to under-perform.



5. You're in business as a florist. You're just entering your second year of trading. You've already spoken to a High Street lender and they asked you to produce three years' worth of accounts. You simply can't do this. So, it looks like re-mortgaging to buy that conservatory you wanted is out of the question, or is it?



• There are lenders who will allow you to certify your own income with a 'true self-cert'. This is done by filling in a simple declaration, which is all that is required as proof of the income that you receive. This eliminates the need for accounts to be provided. This type of mortgage usually relies on you having at least 15% of equity in your property.

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