Endowment due to mature Oct 2013. Need some advice please

maisie1234

In Oct 2013 our £55k endowmnent matures. A number of years ago we had warnings that it was not going to pay out so converted £25k of the original £55k. So effectively we owe £30k.

Friends Provident have stated it is likely to pay out £42k come Oct. Our mortage with Santander has just been fixed at 2.99% 5 year fix and they have verbally told me that I can pay ALL of the endowment regardless of value of it WITHOUT penalty (we have a overpay element of 10% of our mortgage per year which is currently £220k.).

We will probably want to do pay off as much as we can but do not want to be penalised for paying off more than 10%. If what Santander is saying is true will the endowment element NOT be counted at all as an overpayment. Once we pay it off we would like to keep our mortgage payments as they are.

Sorry - its a little complex!

holly_hobby

That doesn't sound right to me at all, a contractual ERC is a contractual ERC end of (notwithstanding the 10% annual overpayment most lenders permit within an ERC term), and you're right to question what you have been told.

Call Santander back and ask for this offer of unrestricted overpayment to be confirmed in writing

There has been many a case where call centre operatives have made some raving howlers in giving "advice" or confirming criteria - with the individual subsequently having to really battle to have associated fees refunded or matters addressed as a result.

Hope this helps

Holly

dunstonh

they have verbally told me that I can pay ALL of the endowment regardless of value of it WITHOUT penalty (we have a overpay element of 10% of our mortgage per year which is currently £220k.).

That makes no sense. I wonder if it is a terminology issue. You called it endowment when its is actually an interest only mortgage. The interest only mortgage is what Santander deal with. They do not deal with the endowment. So, going into a fixed rate mortgage would have no impact on the mortgage and it could be paid into your current account without impacting on an ERC. However, if you then decided to use the money in your account to repay the interest only mortgage, then you would suffer an ERC.

Either you have been told wrong or it is a misunderstanding.

maisie1234

I agree, I asked him to repeat again and he said 100% he was correct! I have written to them asking for it to be put in writing and heard nothing back yet.

I agree, I could overpay and then find there are penalty charges......

maisie1234

My view (and I am not an expert!) is that I can pay £22k (10% of our outstanding mortgage) without penalty this year. We took out the fixed rate in March 2013 so effectively I think I can pay £22k in Nov 2013 and then in April 2014 whatever 10% of the current balance is