Endowment redress

jsk_2

Thanks to you website I claimed against a mis-sold endowment policy from L&G taken out in 1992 for £60k

L&G have accepted that I should not have been sold an endowment policy so have offered to buy back my policy for £20k, or offered me £1800 if I decide to keep the policy. The £20k offer is to redress the balance had I taken out a repayment policy in 1992.

My concern is after 15 years I would have paid off around half of the repayment mortgage so L&G’s offer should be around £30k.

L&G have based this offer on a calculation; does anyone know what this calculation is? Or how I can calculate how much of the mortgage I would have left to pay after 15 years of repayments?

dunstonh

L&G have based this offer on a calculation; does anyone know what this calculation is? Or how I can calculate how much of the mortgage I would have left to pay after 15 years of repayments?

They calculate where you would be now on a repayment mortgage and compare that to where you are on the endowment mortgage. Then the cost difference is taken into account (endowment mortgages typically being a little cheaper than repayment mortgages). The calculation is called mortgage fundamentals and is set by the FSA. If the figures input are correct (and you get those) then the output should be correct.

jsk_2

Thanks for they reply,

In general terms would I only have paid off one third of my mortgage after 15 years from a 25 year mortgage?

Regards

dunstonh

The repayment mortgage goes down in a curve. Very slow to start with but accelerates as you get closer to the end. A third after 15 is about right as your capital drops the most in the final 10 years of a 25 year repayment mortgage.

defender_of_the_weak

Seems low to me. 60% of the term and only 30% of capital seems too big a gap. L & G commonly get calcs wrong or input incorrect data. Ask for mortgage fundamentals and check that the information matches your mortgage history