confused & frightened

johmar

Hello,

Can someone please direct me where to start. I have been reading through some on the posts here, and much of this is going over my head.

My father went to the Halifax on his 70th birthday (in march) thinking that his mortgage was paid and he was getting a lump sum. But he was told that the payments he has been making for the last 25 years was for interest only, and he still owes the original £25,000. The lady they spoke too (Lynn) said she was very confused by their account, and they appear to have been paying too much. She also said she wasn't an expert on historical mortgages, she was a 'new mortgage' person.

He has been to see a financial advisor, who said that the Halifax have made a big mistake and he has over paid. He said that my father was in the clear and would not have to pay anything. He also said if the Halifax ring for a settlement, 'offer them £300'.

Some time passed wait for the Halifax to make a move, but nothing.

The financial advisor then advised him not to pay any more money. So they stopped paying and got the expected letter, with a phone number in Leeds. My father phoned then number, he was re-directed 4 times! before ending up back with Lynn who said, once again, that she was not a historical mortgage person, and all she could say was what was on the screen.

My father then passed this information to the financial advisor, who then said he phoned Lynn, and now the financial advisor has done a complete U-turn and has told my dad he has to pay the lot!

May father is frightened and confused. He has just cashed in all his pensions and he has just enough to cover the balance. He has also looked into equity release, but the best offer was for £27,000 for a 50% stake in their house which is currently valued at £180,000. That's £63,000 profit on today's prices! Is this right?

My apologies if I have gone into the wrong details. My mother believes they signed up for a endowment mortgage, but they are saying it was a pension or budget mortgage.

I expect there is an FAQ, or FSA web page I have not found which will explain much of this, so can anyone please point me in the right direction?

My father is not a well man, and this worry is having a bad effect on him. I just want to help, and my searches brought me here. I hope someone can help.

Thanks for reading.

tipsychick

The first thing you need to do is find out exactly what type of mortgage it is and what the original terms/repayments were, etc. Get your parents to dig the paperwork out and find out what they signed up for. People rarely chuck this stuff out - it's bound to be somewhere! I'm not much of an expert in this area but loads of people on here are, though they will need that information, I'd imagine, before they can help.

What made the financial advisor think your father was in the clear and what did the less than informed 'new mortgage' Lynn say that made him change his mind so dramatically?

Mikeyorks

Hi,

I'm not a Mortgage expert - and one will pick up this thread shortly, I'm sure, and offer better advice.

But what you are saying - does not ring true. If you go back 25 years Halifax, I'm certain. would not have offered an 'interest only' mortgage without an absolute certainty the Capital would be paid? And that would normally have been via an Endowment policy or similar. Which - 25 years ago - they would have insisted was 'assigned' to the Halifax. They only relaxed that stance in more recent years.

The problem will be - Halifax will have no records to show what happened when the Mortgage was initiated. (Had that problem with Halifax with a far more recent Mtge) Do your Mum / Dad not have any of the original papers?

MortgageMamma

Sorry I cant be of much help as I'm 30 and not familiar with older mortgages but if you ask someone who is much much older like stanmoresaver then he should eb able to help

one thing i would say is it is important for your dad to dig out the paperwork and until you have resolved what has actually happen here you must not commit to equity release.

Ian_W

I'd endorse what mikeyorks says, something doesn't sound right about this, in terms of how the Halifax would have dealt with an endowment mortgage in the early 80's.
I had a repayment mortgage with them in the late 70's and they were a very pernickity lender. I went elsewhere for an endowment mortgage in the mid-80's and as far as I remember up until the early 90's virtually all lenders insisted that an endowment policy was taken out/or already in force to cover the whole amount of the IO mortgage and that it was assigned to them so that you couldn't cash it in without their permission.
I think you need to check whether your Dad has been paying for an endowment policy and also why the Financial Advisor has changed his mind.
Best of Luck.

herbiesjp

:spam: reported

silvercar

I took out an endowment mortgage with the Halifax in 1993. I quote from a letter received at that time:

"It is important that the policy documents are checked as your monthly payment is calculated on the basis that they provide suitable cover for your mortgage.

Assuming the policy documents are acceptable, your mortgage can continue as arranged. However, if you cannot produce the documents your mortgage will have to be transferred to a repayment basis, for which a £40 fee is charged."

I also have the Halifax mortgage conditions 1990 which has a whole section on life policies being assigned to them and the Halifax acting as attorney in the mortgagor's name in dealing with the life policy.

EdInvestor

johmar wrote:

My father went to the Halifax on his 70th birthday (in march) thinking that his mortgage was paid and he was getting a lump sum.

From this it seems he thought he had an endowment mortgage. Which company would this have been with? It will be a separate payment going from his bank account every month, usually to an insurance company such as Standard life, in addition to his monthly mortgage payment going to the Halifax.

Aged 70, by the way is pretty old to be finishing a mortgage, normally they finish before retirment for obvious reasons.

But he was told that the payments he has been making for the last 25 years was for interest only, and he still owes the original £25,000. The lady they spoke too (Lynn) said she was very confused by their account, and they appear to have been paying too much.

Did she perhaps mean theat they were paying the higher mortgage amounts that would be paid for a repayment ( not an endowment) mortgage? If your father has one of these, there should not be a problem.

He has been to see a financial advisor, who said that the Halifax have made a big mistake and he has over paid.

This could be the case IF there is in fact an endowment in existence. If he has never changed his standing order to reflect different interest rates, that could also lead to overpayment.

He has just cashed in all his pensions and he has just enough to cover the balance.

You can't actually cash in a pension: does he mean he has taken the 25% tax free cash from them? Has he bought annuities with the rest? If he is 70, how come he didn't do this years ago when he retired?

He has also looked into equity release, but the best offer was for £27,000 for a 50% stake in their house which is currently valued at £180,000. That's £63,000 profit on today's prices! Is this right?

This looks wrong assuming the valuation is correct.

My mother believes they signed up for a endowment mortgage, but they are saying it was a pension or budget mortgage.

This is the fundamental question you need to find out the answer to: what kind of mortgage is it?

Repayment mortgage
Endowment mortgage
Pension mortgage

If it is a pension mortgage and the tax-free cash from the pensions covers the mortgage amount, then it seems that he is OK.This is actually what is supposed to happen with a pension mortgage.

Tootsie_Roll

I have come across this scenario quite a few times in the past and it is always devastating for the people concerned. Usually it is simply the borrower has stopped paying the endowment because they don't associate the two products together (particularly if they are of an older generation such as the posters Father). Previous posters comments about Halifax assigning policies are quite correct - in practise though I have found they did not always enforce the condition and change the mortgage type or insist on a new policy. Being quite cynical I have often wondered if this was a deliberate ploy as the borrower would end up paying a lot more in interest payments !

Pension mortgages were pretty rare in the early 80's and were often sold on the basis that when the borrower came to retire the actual mortgage balance would be tiny compared to the fund - with the decline in fund values recently this may have had a massive effect on his lump sum. The OP mentions he has just enough funds available after 'cashing in' his pension - are we to assume that it is the lump sum he is referring to.

Really the only way of clearing this up is to review the original documentation if it is still available. Alternatively/additionally I would recommend arranging a meeting with someone senior in the branch (at least the branch manager) and reviewing their documentation as well. Ask for a detailed statement for the whole period (25 years) especially if they have been overpaying - it is not unheard of for the lender to have set it up incorrectly in the first place and for the parents not to notice (why would they?) although I doubt it if the Mother believes they were on an endowment, not repayment.

lowis

please don't let you dad do an equity release scheme - they are such a rip-off.

my parents released equity by moving to a cheaper house, it's not as big as their old place and is in a town and not in a village as before - but they love their new home and are financially very comfortable again.

dunstonh

I recommend you review Ed's post. It highlights a number of inconsistencies and/or misunderstandings which could be at the root of the problem. Until you understand what has gone on in the past and where your father currently stands, there is little point planning for the future.

When seeking advice, make sure it is from an independent and not the Halifax sales rep.