Possible mis sold mortgage

Aquariaq

4 years ago my mother and father had a letter from their mortgage endowment company stating that the policy would going to have a short fall at the end of its term. Immediately they contact their mortgage company The Woolwich to change their mortgage. They remortgaged with a repayment plan and cancelled the endowment policy, or so they thought.

While sorting out a backlog of paper work they came across some mortgage statements and noticed that the mortgage amount was not going down much. I looked at it myself and thought it was not an easy read and a very confusing statement. My mother and father have just come back from the bank after querying the £35,000 that is still showing on the statements considering that they have only 2 years left to pay. They have just been told that the mortgage is a part repayment and part interest only, to which the bank asked have you got an endowment policy or any savings to pay the remainder off at the end of the term. When they remortgaged the bank assured them that this would be all paid when my father reaches 65. At no time were they asked about extra funding, savings or endowment plans as it was understood to be a repayment plan otherwise they would have not taken on this new mortgage.

This has become a great shock to them, they have no real savings or endowment plans to cover the money that is left. We really don’t know what we can do.

Many thanks to any helpful advice.

TonyMMM

What happened to the proceeds of the endowment plan they cancelled ? Did they spend it, or use it to pay off some of the balance? Or is the plan still active/paid up ...you need to find this out

opinions4u

Aquariaq wrote: »

Immediately they contact their mortgage company The Woolwich to change their mortgage. They remortgaged with a repayment plan and cancelled the endowment policy, or so they thought.

Do you mean they stayed with the Woolwich and thought they had changed to a repayment mortgage?

Do you have any documentation from around this time telling them in writing what had happened? What does this letter say (if it exists)?

Were the Woowich giving advice, or simply following an instruction to change the mortgage in some way? Was the request made in writing?

Unless there is some written evidence of the change being requested and implemented, you will struggle to show mis-selling or maladministration.

Worst scenario is that they have a mortgage and will need to renegotiate a term that takes them well in to retirement.

dunstonh

This doesnt sound like a miss-sale.

What usually happens in cases like this is that the lender will convert the amount of the shortfall into a repayment mortgage and keep the rest on interest only to be covered by the endowment policy.

they have no real savings or endowment plans to cover the money that is left.

What about the endowment policy that was in force?

sarkin

You should have a mortgage statement for the last 4 years and every January when your parents received thier statement it would show exactly what they had paid.

Aquariaq

Thanks to all those who have replied.

The original mortgage was interest only with an endownment policy. Once they received the letter stating a short fall they asked for a totaly new repayment only mortgage. The endownment policy has been cancelled and what little return they had from that went straight to my mother and father.

We have found original request forms from their meeting with the banks advisor and looking through it at the end of most sections he has written that they request the mortgage to be finished by retirement age. None of the savings or endownments related boxes are ticked.

We are still siffting through the paperwork. If i find anything else that may help i will post.

Many Thanks x

dunstonh

To fully surrender the endowment and spend the proceeds rather than use it to reduce the mortgage would be very unusual for someone who hasnt got the earnings capacity (timescale and/or affordability) to switch to full repayment.

If the letter is from the lender and confirms that the new mortgage is fully repayment mortgage then there is some scope for complaint. Although the monthly costs would have shot up and your parents would still be liable for those as effectively they havent been paying enough towards the mortgage.