Act now on mis-sold endowments: new article

dunstonh

Have i just shot myself in the foot by trying to pay off the mortgage earlier.

No. You have paid less interest on the mortgage and that is where you saved money.

The reason it reduces endowment redress is that if you were willing to pay £200 extra on an endowment mortgage you would have done the same on a repayment mortgage so its only right its calculated on the same assumption.

Detest_Lloyds

dunstonh wrote: »

No. You have paid less interest on the mortgage and that is where you saved money.

The reason it reduces endowment redress is that if you were willing to pay £200 extra on an endowment mortgage you would have done the same on a repayment mortgage so its only right its calculated on the same assumption.

OK. 2 people take out a mortgage at the same time for the same amount for the same term. Both take out an endowment with the same company to cover the mortgage for the same term but one takes out a higher endowment amount and therefore pays more in contributions every month but neither of them at any time pay anything towards the actual mortgage. Lets say 15 years later both apply for endowment redress and both are successful. The one who has paid more every month for 15 years has obviously built up a higher surrender value and therefore receives less compensation. Is that correct?

Bilko99_2

That is my understanding of what the previous poster wrote. In my case I have a flexible endownment mortgage in that I can simply pay the interest, or I can choose to overpay, thereby eating into the remaining capital. Because I have overpaid, Abbeys argument is that since there will be less capital left to be paid off at the end of the mortgage term they do not need to compensate as much, had i not overpaid.

I remember when I filled out the Abbey questionnaire, they asked about other savings or other endownment policies etc. Using this argument there's nothing to stop them saying they wont pay out if someone has sufficient funds in another savings account to pay off the capital at the end of the term.

Detest_Lloyds

Sorry Bilko99 but my query is slightly different. It might be better if I gave an example as follows:- Person1 mortgage = £50,000 25 years and endowment = £50,000 25 years. Person2 mortgage = £50,000 25 years and endowment = £60,000 25 years. Every month for 15 years both pay the mortgage only interest charge (and no more) but Person1 pays £100/month endowment payment whereas Person 2 pays £120/month endowment payment. After 15 years lets say Person1 endowment is valued at £20,000 and Person2 endowment is valued at £25,000. RU89 calculation is applied to both yet both calculations are based on a 25 year equivalent repayment mortgage. Is that correct? Do the RU89 guidelines specifically state that an equivalent repayment mortgage must be the same number of years as the original mortgage term? If so then Person1 gets more compensation than Person2. Is that fair?

turbobob

Detest_Lloyds wrote: »

OK. 2 people take out a mortgage at the same time for the same amount for the same term. Both take out an endowment with the same company to cover the mortgage for the same term but one takes out a higher endowment amount and therefore pays more in contributions every month but neither of them at any time pay anything towards the actual mortgage. Lets say 15 years later both apply for endowment redress and both are successful. The one who has paid more every month for 15 years has obviously built up a higher surrender value and therefore receives less compensation. Is that correct?

The calculation compare two things:

- The policies surrender value versus the amount an equivalent repayment mortgage would have reduced by.
- The costs of your actual arrangement against a repayment mortgage (and supporting life cover, if needed).

If the endowment target amount is significantly higher than the mortgage, and that person has been paying more than they would have been paying on a repayment mortgage, then the compensation can be adjusted to take account of this. This might be through a partial refund of premiums.

In simple terms though, yes the person who has paid more may get less compensation.

Janette9

We purchased our house in 1985 and have an endowment mortgage. Our mortgage is due to be paid up May 2010. I put a claim in like everyone else did only to be told that we couldn't claim as we were sold the policy by an independant source, (apparantly through the estate agent)? I personally don't remember this as I really thought it was all dealt with by the building society . However I phoned the building society and they sent me a letter stating it was through Grosvenor & Co who were our estate agents at the time. I remember sitting in the building society and being sold this endowment and being told it would pay our mortgage off plus we would have a nice tidy sum for us to enjoy once the children had grown up. I have been told I can't claim. What difference does it make who sold it you, we were still MISOLD an endowment. We are going to be short next year and will have to find the difference and it is going to made even worse by the recent hardship this country is facing at the moment with interest rates so slow, while it will help the people with huge mortgages it is not helping people with a shortfall for their endowments. Has anyone else had the same problem?

Jan :mad:

DAVE1003

hi,
i have an endowment for my mortgage which finnishes in 2 1/2years up until july it was on track so i wasn't too worried.
but my brother who claimed some money back for his last year cashed his in as 6 months ago (he has at least 10yrs left on his) he was told it was worth over £8000 he checked a few weeks ago & it was down to £6500 & every couple of days he rang as he haddn't recieved his cashing in form & it was going down by about £50 every couple of days.
so i called the co-op who supplied my endowment policy & within 6 months mine had dropped £900 for the middle settlement value from being in credit by £800 to now being £100 oweing this is the 5.75% level & @ 4% i am £560 in debt when the mortgage is finnished.
I don't know what to do, do i cash it in, i have been told if i cash it in now (or 2 days ago i would have a cash in value of £8442.40 which would leave me with just over £2000 to find in 2 years or can i still claim as i was told i would have a lump sum after i paid my mortgage off.
if i can claim what would i be paid out if it works on the value now & the middle 5.75% i would only be paid £100 but everyone knows things are going from bad to worse so that £100 would be lost with waiting.
can anyone explain how it all works or would i be better just cashing it in now.
thanks. :money:

Janette9

Hi

On last years statement we were going to be between £1.200 - £3,900 sort depending on the interest between then and now, it was worth £12,000 then. Should we cash ours in now and get loan for the difference. You just feel like this country has really let its own people down, the only people benefitting who are the ones who come in and sponge off the state. I have had 4 children and worked all my life with the help of my mother who looked after them for me, it just seems wrong that at this time of life you end up in debt.

:mad: Jan :money:

dunstonh

What difference does it make who sold it you, we were still MISOLD an endowment.

It is very important as you are making an allegation of fraud against the individual that sold it. It is the seller that is responsible and would have to pay up (or face disciplinary action or lose their job) if a complaint is upheld. Who did you think would pay the money if you could complain and it was upheld?

As 1985 was pre-regulation, it wasnt mis-sold. There were virtually no regulations back then and therefore none to breach. That didnt come in until 1988. So, you have no realistic further course of action available to you.

----
next post
----

can i still claim as i was told i would have a lump sum after i paid my mortgage off.

If you can prove that then yes. If not then you have to be hoping they dont have evidence that shows the opposite.

if i can claim what would i be paid out if it works on the value now & the middle 5.75% i would only be paid £100 but everyone knows things are going from bad to worse so that £100 would be lost with waiting.

That isnt how redress is calculated. They work out how much you have paid to date compared to a repayment mortgage and how much the repayment mortgage would be outstanding compard to the interest only element and endowment surrender value. With only £100 difference on a 5.75% illustration, even if the complaint was upheld, its unlikely to result in any redress payment. Also, most endowment mortgages were cheaper than repayment mortgages. it was one of the most common reasons people went with them.

Investment returns do not necessarily follow the recession. Markets tend to react in advance. They are already up nearly 15% from their low point last October. So, dont assume it will get worse. No-one knows but the recession is largely priced into curren values. Only further unexpected news would hit the markets.

DAVE1003

so it doesn't look like i have a claim then so would you if you were in my position cash the endowment in now or leave it to run its full course