Building Society don't want endowment cheque!

HooCanTellMee

Hi all,
Can't believe this, had a letter from the Pru, endowment is due for payment in a couple of weeks as it was linked to mortgage it would be paid directly to Building Society. No problem! Second letter from the Pru, the Building Society sent a reply of no further interest? What does that mean? We still have the mortgage, the cash is still outstanding. The Pru now want to send us a cheque, which will then have to be cleared through our bank, then paid into the Building Society, to come off of the mortgage. I am baffled, in this economic climate, why would the Building Society not just take the cheque? Why put the temptation of a fairly large cheque into my grubby mitts? World cruise beckons! In my case, the cash will be paid off, but how unfair is it to do this, many people are struggling with debt, this could be seen as a short term way out of trouble. With a long term very serious consequence! When the mortgage term ends will the Building Society still have no further interest?

dunstonh

Second letter from the Pru, the Building Society sent a reply of no further interest?

They are saying they no longer require the policy to be assigned to them (most havent since the late 80s, early 90s)

I am baffled, in this economic climate, why would the Building Society not just take the cheque?

economic climate is irrelevant. This is probably the third or 4th recession or financial crisis since you took the policy out.

Your responsibility doesnt change.

Why put the temptation of a fairly large cheque into my grubby mitts?

They are treating you like an adult.

When the mortgage term ends will the Building Society still have no further interest?

only if you repay the mortgage.

HooCanTellMee

That told me! Wonder why the Pru thought they could still pay direct to the Building Society, guess they are living in the past too! Guess thats what I get for starting a mortgage that long ago! Then just keep paying it. Guess I had better grow up and forget the cruise. Sorry to waste your time.

dunstonh

Wonder why the Pru thought they could still pay direct to the Building Society, guess they are living in the past too!

If the policy was assigned at point of sale then that assignment remains in place until maturity or it is revoked.

One of the most common maturity payment delays are where assignment to the original lender still exists yet years of remortgaging mean you are no longer with the same lender. So, by pre-empting this potential delay, its easier to remove the assignment and place responsibility for the maturity in your hands. People have been known to wait up to a year after maturity to get obsolete assignments removed. So, it is a good thing.

Sorry to waste your time.

You haven't.

HooCanTellMee

The help was appreciated, just thought it was bonkers that the Building Society didn't just take the cheque. Would never take the cash and run, still old school, only debt is mortgage! Don't spend what we don't have. I know we have had several recessions, just haven't been offered a large cheque during any of the others! Just had a thought, my bank won't think I am money laundering when cheque gets paid in! Hubby is worried that the delay will cause hassle, although as I understand it the mortgage is not due to end for a few years yet, it was extended and increased when we moved. This was also many years ago, and the other endowment may well fall short!
Due to the Building Society being taken over, the only way to discuss mortgage queries is by phone! My local branch tell me they are now not involved with these mortgages and cannot help at all. So I will be running up the phone bill today trying to sort this out. This makes me realise how out of touch I am with finance, comes from being a stay at home Mum for years!
On a general note, mortgage statement each month states amount owing, on a now part and part mortgage. Changed from interest only when endowments hit the fan! When endowment is paid off will the money owing decrease by this amount. My husband thinks not, I disagree. My thought is that the mortgage will be significantly smaller, hopefully the still outstanding endowment will then pay the balance? One of us has it completely wrong, and I am hoping it is him.

HooCanTellMee

Just re-read your second reply, and can understand the logic, although it hadn't occurred to me. First thoughts were that they were just making life difficult. Apart from changing to part and part mortgage we have stayed with the original lender and the mortgage was just increased when we moved house. So the money was assigned to a valid mortgage and I am still unsure why, in this case, it could not have just been accepted. I thought the Building Society was being difficult, the letter from the Pru made no explanation of why the offer of payment was rejected, just said that the Building Society said they had no further interest. Guess they could do with someone like you dealing with correspondence. To me, no further interest seemed a very odd description when the mortgage was still in place.

HooCanTellMee

Just had rather surreal chat with Building Society, most of my questions answered. Weird talking about what seems a very important event on the phone, bit like getting married by e mail! Endowment just about covers rest of mortgage, so it was suggested we pay off the balance, plus early redemption fee (peanuts compared with paying interest for the next nine years). Then debt free, so I guess, providing the guy on the end of a phone knows his stuff, party time!!!!!!!!! Going to send letter with redemption fee and amount still due, so it will be in writing. Hubby should be pleased, if he can believe it. Only have to work out what to do with smaller endowment which we are paying, and will be due to payout when mortgage was supposed to finish!

opinions4u

You don't say what ERC applies.

But it's possible that you could make a "free" overpayment (typically 10% of the debt) that escapes the ERC.

Check it out with the lender first. But if it was a Halifax mortgage with an ERC I'd be paying 10% asap and the other 90% a day later. Different lenders may have different loopholes to exploit.

HappyMJ

You may also be able to leave a very small balance of only a few pounds for the next 9 years to avoid the early redemption fee.

HooCanTellMee

On phone was told no fee for early lump sum payment, so could pay endowment cheque in with no charge for doing so? But this would leave very small amount outstanding! We have been overpaying whilst interest rate was low. Only fee is for finishing the mortgage early, this would be less than keeping small mortgage with interest for nine years.
Please explain if I have it wrong.
Not with the Halifax, old Building Society now taken over by the great Santander!

HappyMJ

HooCanTellMee wrote: »

On phone was told no fee for early lump sum payment, so could pay endowment cheque in with no charge for doing so? But this would leave very small amount outstanding! We have been overpaying whilst interest rate was low. Only fee is for finishing the mortgage early, this would be less than keeping small mortgage with interest for nine years.
Please explain if I have it wrong.
Not with the Halifax, old Building Society now taken over by the great Santander!

What it's less than £1? If you leave a few pounds under £5 outstanding on the mortgage the interest will be 1 penny per month. Over 9 years that's around £1.