Endowment and father passing away

debtblonde

My farther has passed away a couple of weeks ago, he had an endowment morgage for 50k with my mother on the house which was due to expire in 5 years and my dad seemed to think there would be a shortfall off 10k. The endowment assurance have agreed to pay 50k. im aware with an endowment you have 2 agreements one with the lender for the morgage and one with the insurer for the endowment policy.

So do we now have to pay the lender of the morgage off which im persuming would still be 50k, what stops you from carring on with the endowment? i find this endowment a bit confussing!

Thanks for any advice in adavance

Lee

dunstonh

The lender will normally wait for the endowment proceeds to be paid. Typically that is not a long delay and can be as little as a week or two. Interest is paid on the mortgage still until it is cleared.

opinions4u

Really sorry about your loss. Losing a parent is tough, even though most people know it's going to happen one day.

Firstly, the mortgage payments should continue to be made if at all possible.

A claim needs to be made on the life assurance policy.

The life assurance company (or the mortgage lender) will be able to tell you if the policy is "assigned" to the mortgage. If it is, the proceeds of the claim, £50k, will be paid directly to the mortgage lender.

If the policy is not assigned to the lender, the proceeds will be paid to the surviving policyholder, assuming it is a joint policy (or Dad's estate if it's a single name policy).

If the proceeds are paid to the lender, they will repay the mortgage unless you come to some agreement with them. If the proceeds are not paid to the lender, but to Mum, she will need to discuss her options with the lender. In most cases she would be expected to repay the debt, although it may be possible to transfer the mortgage to a repayment mortgage and retain the £50k. If she did this she would need to show that she could afford higher mortgage payments.

what stops you from carring on with the endowment?

It's more a case of why would you? From what you said, it's a case of £50k now and no more interest payments and endowment premiums. The other alternative is 5 years worth of interest and endowment premiums. Then it will only pay out £40k and there will still be £10k owing.

Unless there are exceptional circumstances, I'd say make the claim, pay off the mortgage and enjoy memories of Dad.

debtblonde

opinions4u wrote: »

although it may be possible to transfer the mortgage to a repayment mortgage and retain the £50k. If she did this she would need to show that she could afford higher mortgage payments.

In this case she would just end up paying more than 50k in the long run so she may aswell pay the morgage provider the 50k,

im guessing it not assigned as the assurance are paying directly to my mother, theres no exceptional circumstances, My father (60) was the main bread earner so to speak, my mother (58) has a part time job as a cleaner, brings in £100 a week, currently off sick with after having a hip replacement.

Thanks for your info

dimbo61

Could your mother ask the assurance company to pay the mortgage lender direct and use the payout to clear the mortgage asap
Thinking benefits! as having £50K in savings will stop mum from getting many benefits.
Endowment was taken out to pay off mortgage or provide insurance to clear the mortgage in the event of death or either parent
Sorry for your loss

getmore4less

Sorry for your loss it is a difficult thing to loose a parent even though we know it will happen

There is still the need to deal with the estate who is the executor?
They normaly handle all these issue with the assets and the debts to tidy things up.

These days it is worth doing this to get the paper work sorted especialy the IHT tax forms since it is easier to deal with the transfer of the nill rate band when on the second death if needed.

Check the mortgage for any penalties paying it off, also the land registry will need to be updated of the change of ownership.