Advice needed on old Aliance and Leicester Endowment Mortgage

Wonderingwhattodo

Hi
I have been reviewing my mortgage and came across my old paperwork from when I bought the house I still live in in 1989. When I went to view the house, a man who said he was from a solicitors offered to arrange a mortgage for me. He arranged a mortage through Alliance and Leicester and I moved in in 1989. It seemed very straighforward. At no time did anyone ever mention that this was an endowment mortgage, and I happliy went on paying it until my friend was helping me with some financials in 2001 and she told me I had been paying interest only. I had no endowment cover (that I know of).

I called A&L and they said that I should change to capital and interest for a further 20 year term. So I had been paying interest only without knowing for 12 years. I thought that I couldn't do anything about it at the time as the woman on the phone told me it was my own fault.

Now I have read the sparce paperwork I was sent from A&L at the time, and the deeds, it doesnlt mention 'endowment mortgage' anywhere. I have the deeds here and I found the name of the soilicitor who handled the mortgage and it turns out he was struck off in 1995 for mortgage fraud!!

The upshot is that I had been paying 12 years of a mortgage that I thought was paying off the capital for nothing. I could have been in a much better position now if it wasn't for that, with my mortgage nearly paid off. I know that is is a long time later, but I beleived the A&L when they said there was nothing I could do. I don't even know if there was ever an endowment policy set up, I certainly wasn't told the purpose of it and that it was neccessary if it was and would probably have cancelled it as I was very short of money back then.

I have since remartgaged with Santander and I wondered if there is anything I can do about the previous dealings with A&L, and who I should go to, or do I just have to face being ripped off (I can't afford a big legal bill)?

Thank you in advance for any advice.

holly_hobby

Not sure how you were ripped off if A&L effected an interest only mortgage with no repayment vehicle, the adviser making commission on mge related products and aftersales policies - so it would have actually been in their interest to effect a repayment vehicle.

The solicitor had no part in arranging your mortgage or advising on a reayment vehicle - his subsequent dis-barring is irrelevant to your particular circumstances.

Your property deeds (if thats what you mean by deeds) won't mention any mortgage repayment type.

Your mortgage is an interest only mortgage, which were at the time of sale traditionally supported by a low cost endowment repayment vehicle. Although, its important to note that other investment mediums could have been utilised as a repyament vehicle instead of a LCE.

Your point of sale docs would have all stated this was an interest only mortgage, and that a repayment vehicle was reqd.

For the 12 yrs you held the mge with no repayment vehicle, you recd annual mge statements, clearly stating the repayment method was interest only, and showing no reduction in the mge balance, also reminding you that you needed to have a repayment vehicle in place.

You say you would have cancelled any endowment policy you effected in any event, due to budget - so by your own admission it appears you would have been comfortable with electing to have no repayment vehicle in place.

I find it difficult to imagine that the lender did not discuss alternative repayment methods, and you having chosen interest only, then failed to try and sell you and endowment policy.

My thoughts are that one was offered and refused by you, or purchased to secure the mge, and then later let lapse (which you may not recollect due to the passage of time).

But, from what you say, I personally do not see any complaint to be laid with A&L - as it is the mortgagor's responsibility to ensure that they had a suitable repayment vehicle in place, for the duration of their IO mge.

Sorry if this is not what you hoped to hear.

Others will be along with comment

Hope this helps

Holly

Annisele

Sorry OP - I think Holly Hobby is completely right.

It was your responsibility to ensure that you had a repayment vehicle in place if you wanted one. From what you say, you didn't want one - money was extremely tight and you couldn't afford to make repayments at the time.

The paperwork wouldn't have said "endowment mortgage", because you didn't actually have an endowment mortgage - you just had an interest only mortgage with no supporting repayment vehicle.

I don't quite see how you were "ripped off" - A&L lent you money, you paid interest on that money, and nobody sold you anything that you didn't want. You've had the benefit of the money that you would otherwise have spent on a repayment vehicle.

InMyDreams

Wonderingwhattodo wrote: »

I could have been in a much better position now if it wasn't for that, with my mortgage nearly paid off. ... I was very short of money back then.

Yes, if you had been paying into some sort of repayment vehicle for those 12 years, you would indeed be better off in terms of your mortgage debt now. But you say you were short of money as it was. If you were paying into a repayment vehicle you would have been even shorter.

You haven't been ripped off. You had it easier than you would otherwise have done for those 12 years and now it's time to pay it back.

Granted you may have chosen to do things differently if you had understood all the facts at the time, but you haven't been ripped off.

You don't imply in your post that you are struggling with a repayment mortgage now, so it could even be that this has worked out best for you anyway as you would have struggled in the earlier years, even if it would have meant that you would have paid less overall.

Wonderingwhattodo

Thanks for the reply, I think I need to explain that until after the mortgage was arranged the only person I communicated with about it was the man from the solicitors who brought the papers for me to sign. How was I to know that wasn't the normal procedure, this was my first mortgage? And I can assure you that endowment or interest only was not discussed. This person did not explain anything like that, just the repayments, which I could afford. I saw no paperwork, the solicitor kept it all.

I have letters that I received from A&L after I moved in which do not mention interest only or endowment. Maybe it is my fault for not checking statements, but I was young back then and believed that banks and solicitors would be fair and tell the truth (obviously not, as the solicitor who arranged this was struck off and banks reputations are not exactly good) as they are professionals, so maybe I didn't check them as much as I should. Why would I when I believed everything was going just fine?

The point I was making about any policy taken out was that I wasn't aware there was an endowment policy, or I wouldn't have cancelled it. I had no need for a normal life policy as I had no dependents, no money and a lot of life left. Of course I would have kept it (if there was one - that's one of the things I am trying to find out) if I knew it was paying my mortgage off.

Bearing in mind I had no idea it was an interest only mortgage, how could I have had a repayment vehicle in place?

I'm getting a picture of myself in 1989 as young and naive and trusting (more fool me), but my naivety doesn't mean that other people should take advantage and get away with it. It should have all been explained fully to me, and it wasn't, not even by A&L. The transfer from what turned out to be an interest only mortgage to capital in 2001 was handled aggressively, with me being told, not offered, the terms of a mortgage. I was given no choices.

With a little bit more clarity and thinking it through, I expect the man from the solicitors wasn't completely honest with me, didn't show me all the documents and I was taken in. I don't expect I can find out any more about this now as the solicitors company he worked for does not exist any more, the partners were stuck off in 1995 and it closed.

Thanks again.

Wonderingwhattodo

This has all made it much clearer, I think I have been feeling sorry for myself on this. You are right, Inmydreams, I was better off financially paying the interest only. It is the way the term was extended that I feel sore about, but I guess everything has ups and downs. I'm enjoying a very low monthly mortgage payment now, and things could be a lot worse.

You've given me a new perspective, thank you.