Abbey: maturing mortgage, but what have they done?

cottager

Endowment mortgage, maturity date was last Monday, 16 Nov.

Sent back their instruction form, which had various options and sub-options -- I've put our choices in bold (and added numbering to make it clearer).

INSTRUCTION FORM

Please let us know how you wish your maturity proceeds to be paid by placing a tick in the relevant box. All named people on the mortgage must sign this form.

Name: .....
Mortgage Account No: .....
Maturity date: 16 November 2009
Policy number: ..... [Standard Life policy]

Making a payment off my mortgage
1. I would like to reduce my morgage balance by £... and reduce my monthly payments.
2. I would like to redeem my mortgage completely.
..... a) I will appoint my own solicitor to act on my behalf. My solicitor's details are...
..... b) I appoint Abbey to act on my behalf.

Payment of surplus money
1. I would like the surplus money paid into my/our Abbey account.
2. I would like to invest the surplus money with Abbey. I will invest this once I have received my money.
3. I would like the surplus money sent to me by cheque. The cheque will be in the names of all borrowers.

[signed and dated, tel no supplied as requested; form sent SD and delivered a.m. 13 November]

Today, letter received dated Thurs 19 Nov.

Dear Mr and Mrs cottager
Mortgage Number: .....
I'm writing to let you know that we've changed your loan term to 6 months.
Your new monthly payment is £xxx, and is due from November 2009. We've worked this out at an interest rate of 4.24%.
If you have any questions, please give us a call.
Yours sincerely
etc

What??
Don't understand this at all. Redeeming the mortgage means paying it off in full, right?

Yes Abbey, I'll certainly be calling you on Monday... after asking MSE what they think you've done.

So, what on earth have they done?

LeeSouthEast

Honestly?

I dread to think. Good luck on Monday.

cottager

A worry is what they say about the new payment being due this month.

Must be wrong, but the reality is it looks like they're expecting it. If not paid in the next couple of days to get there by the end of the week we'd be in default! Should we be prepared to pay it if necessary, and argue the toss later?
(We had already made a payment in November on the mortgage as it was, before maturity.)

LeeSouthEast

To be honest, I'd keep something by for the possibility. If they take it, argue it out afterwards. At least it'll protect your credit rating.

cottager

They wouldn't be taking it Lee, as the mortgage was always paid by SO since it was set up 25 yrs ago, not DD. SO's been cancelled now as I thought we'd finished paying! I'd need to send an online payment by BACS... and if they are really expecting this now, it would have to be made Wednesday latest.

That's my problem, whatever they say tomorrow. We all know how long things can take to be 'adjusted' on the system, even if it turns out they tell me this letter is in error. So should I pay it to avoid defaulting? -- or (assuming they tell me tomorrow it's all a mistake) take their word for it and not pay?

pwllbwdr

Was there a surplus or a shortfall? If the latter, it would make sense.

cottager

Hi pwllbwdr. Well, shortfall on the endowment, but we'd been overpaying so there's a surplus on the mortgage account in the sense that we were well ahead of where we needed to be. There was less than £8k still owing on the mortgage when we made the final payment (as we thought) beginning of this month. Once Abbey had taken what they wanted from the endowment, we were expecting a cheque for about £12k round figures. That's what we thought the letter was before opening it!

I'm just uneasy about this letter, even if it's wrong, in case they're treating the outstanding £7500-£8k as a new loan, and we're expected to start again from scratch with it, i.e. start repaying this month.

What a mess...

SailorSam

Could it be one of those standard letters that are computer generated and goes out to everyone.

cottager

Who knows, but that's what I'm hoping obviously.
My first call will be to Standard Life to check the endowment funds have gone to Abbey, and when.

gadjah543

I could be wrong but I think it can take up to a month for funds to be released from the life insurance co. to the bank.

cottager

You could be right gadjah... we've never been in this situation before so don't know what to expect

If that's the case it would have been helpful if the letter had explained what was happening. Something along the lines of 'While we await funds from your endowment provider, we have temporarily extended the loan for a further 6 months....' etc.

That would be logical and something we could understand, but as it is we've had a rather anxious weekend in case there's a c***up brewing. And we can't understand why another November payment is required when there's already been one this month, prior to maturity.

Anyway, hopefully some answers tomorrow.