Homeowners already struggling with higher mortgage payments face having to find hundreds of pounds to cover their endowment shortfalls, according to a new report.

An estimated 86 per cent of endowments face a shortfall, according to the survey from Fairinvestment.co.uk, a financial website.

The Financial Services Authority has estimated that as many as 100,000 people have failed to take any action about the problem.

With typical deficits around £1,500, homeowners face having to find hundreds of pounds just as food and fuel bills are soaring.

Fair Investment surveyed its users and found that 86 per cent of participants had received warning that their endowment policy would not be enough to pay off the mortgage.

Of those expecting a shortfall, 41 per cent said it could be as much as 25 per cent of their mortgage and a worrying 23 per cent of people said it would be a huge 50 per cent – meaning a bill of several thousand pounds. Just 6 per cent were expecting a surplus.

Sharon Bratley, a chartered financial planner at Fair Investment said: “Our statistics just go to show what a let down endowment policies were and still are. Those who have not yet done anything and are expecting a shortfall on their policy should act now.

“There are a number of options open to investors, one of these being to sell the policy. For those sitting on their endowment it might not be too late to sell; there are still plenty of investors out there who see endowments as a desirable asset.”

Homeowners are being urged to switch from an interest-only to a repayment mortgage to ensure their loan is cleared at the end of the term.

If your adviser never explained that your endowment might not pay off the mortgage, you can complain to the Financial Ombudsman Service – but many people are now out of time.

You have three years from the date your received a letter warning that there was a high risk of a shortfall. Your endowment company should also let you know six months ahead of this deadline.

By the end of 2007, up to two-thirds of live endowment policies had been time barred, according to the Financial Services Authority.

The misery for endowment policies has continued as insurers have yet again slashed payouts, despite the four-year bull market that began in 2003.

Norwich Union recently cut typical endowment payouts by around 10 per cent and said nine out of ten of its mortgage endowments will not cover the loan when they mature.

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