'I thought it was a sure thing, I was totally naive'

Mark Oliver and his partner Helen felt they had no alternative to an endowment mortgage when they took out their £35,000 loan in 1989.

Mark Oliver and his partner Helen felt they had no alternative to an endowment mortgage when they took out their £35,000 loan in 1989.

He said they were strongly pushed towards endowments when they consulted building societies including the Alliance & Leicester, who they finally signed up with.

The couple, from Uckfield, East Sussex, were paying £55 a month for the endowment and £203 interest on the loan and believed the arrangement was certain to clear their debt in 25 years.

Endowment policies were often sold at that time, with the advice that they would produce a bonus on maturity. Few people understood that a historic fall in inflation and interest rates could cut the growth rate, leading to a shortfall.

"I thought it would be a sure thing. I thought it was something we had to get to get our mortgage. I was totally naive and ignorant," said Mr Oliver, 36, a canoe-maker.

The couple realised their assumptions were wrong when a friend who worked in the industry advised them their policy was "almost guaranteed" to leave a shortfall. Since then they have converted to a repayment mortgage, which Mr Oliver says gives them the security they had hoped for when they took out the original policy.

"I can't see the point of an endowment mortgage now. There are so many other deals with repayment mortgages," he said.

Kathy Franklin, 53, is facing a £5,200 shortfall in the endowment mortgage she took out 18 years ago when, as a newly single parent, she ran into difficulties with the repayment mortgage on her two bedroom house near Solihull, West Midlands.

She said she went along with the change to an endowment because her payments became cheaper and because she trusted her bank to advise her correctly.

Then she got a letter from the bank telling her the policy, which matures in nine years, would be £5,200 short, and asking her to make up the difference. She is determined not to pay and believes she was mis-sold the mortgage.