Money: Readers' Lives - What if you're not so well endowed after all?

Mortgage policies ... transferring shares ... share certificates as collectors' items ... your queries answered
IN 1990 I took out an endowment policy to back a pounds 50,000 mortgage. I had always rented before and was green as far as mortgages go. The attraction of the endowment option was two-fold: my mortgage would be paid off in 25 years' time and I would not have to start again every time I moved. I could also expect to receive a payout over and above the pounds 50,000 needed to cover the mortgage. But having had the unexpected shock of negative equity (now remedied by rising prices) I'm being asked to increase my endowment premiums. Do I have an option? I'm beginning to wonder whether I would have been better off by continuing to rent.

UJ, London

You are part of what is threatening to become a major problem. Millions of homeowners were sold endowment policies in the 1980s but the first hint of possible difficulties did not come until about 1994. At that time, a few insurance firms asked policyholders to increase premiums. They reassured customers that only a handful of policyholders - mainly those who bought in the early 1990s - were affected. Unfortunately the number seems to be growing every year.

The problem with endowment premiums is that they were set using assumptions about investment growth that now look unduly optimistic. Inflation in the 1990s has been lower than in the 1970s and 1980s. It is expected to be even lower over the coming years. Lower inflation leads to lower investment returns.

Most insurance companies continue to reassure policyholders that their endowments will pay off the mortgages. But if you want to be certain that your mortgage will be paid off by the date originally intended, you should convert it to a repayment mortgage. You will have to make increased payments to your mortgage lender. If possible, keep paying into your endowment policy in order to get the full value of premiums already paid in. This would mean looking at the policy as a straightforward savings plan.

There are other possibilities. You could maintain your interest-only mortgage and pay some money into an alternative savings plan - such as a PEP - rather than increase your endowment premiums. Or you could save up the extra premium you are being asked to pay, and perhaps once a year make a partial capital repayment. Discuss this with your lender. The frequency of capital repayments would depend on how soon they reduce the interest you are charged.

Two other points. An endowment policy may let you pay off your loan after 25 years but this is not quite the advantage it seems. You are not obliged to start a new 25-year repayment mortgage term every time you move home. You can choose a shorter term. And if you (and countless other homeowners) had taken out capital repayment mortgages instead of interest- only mortgages backed by endowment policies, you would have been paying back some capital right from the start. This would have reduced your negative equity.

We have an employee share saving scheme at work, through which I recently bought some shares in the company I work for. I'm now in the process of filling in my tax return and realise that, as a 40 per cent taxpayer, I'll have to pay extra tax on the share dividends. My wife is a full-time house worker and mother and does not have sufficient income to make her a taxpayer. Can I give her the shares to reduce our joint tax bill?

MM, Lancashire

You can indeed transfer these shares to your wife. The fact that they were acquired through a scheme at work is irrelevant. But you have to be prepared to transfer ownership without any conditions: your wife must become the unambiguous owner of the shares. You should make sure she has the paperwork relating to this purchase. When she eventually sells the shares, her cost of acquiring the shares will be whatever you paid for them. You can get details of how to put shares in your wife's name from the company registrar.

As a non-taxpayer, your wife won't have to pay higher-rate income tax on the share dividends. In addition, she'll be able to reclaim tax credits accompanying the dividends if they are paid before 6 April 1999. These tax credits, currently worth 20 per cent of the gross dividends (that is, the actual dividend plus the tax credit) are reckoned to meet the tax liability for basic-rate taxpayers. But from 6 April 1999 non-taxpayers will no longer be able to reclaim this tax (unless the government accepts amendments to the finance bill currently going through parliament).

My uncle died last year and I am his one and only heir. I've been going through his papers and have come across several lots of share certificates dating back to the 1890s. I suspect that the companies no longer exist, but was wondering whether the certificates themselves have a collectors' value?

VM, Sussex

Possibly, but don't raise your hopes too much. Scripophily is the name given to the collection of old share and bond certificates. Elaborately adorned share certificates in 19th-century gold mining companies are more likely to have a value than the computer-generated slips of paper of recent years. Certain themes, such as cars, trains and aircraft, interest collectors and so increase the value of certificates from companies that operated in these areas. One dealer specialising in scripophily is Herzog, Hollender, Phillips & Co. You can contact them on 0171-433 3577.

It is remotely possible that the certificates are for shares in companies that have been taken over by firms still quoted on the stock market. They may have some stock market value. But it's likely that your uncle received replacement share certificates at the time of any takeover and subsequently sold the shares.

q Write to the personal finance editor, 'Independent on Sunday', 1 Canada Square, Canary Wharf, London E14 5DL and include a phone number, or fax 0171-293 2096.

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