Do you HAVE to use endowments to pay off M'gage?

holly_hobby

Hi,

No they should have the policy doc, if they cant locate it the lost policy declaration will solve it.

If the policy is assigned to the lender, the maturity value will go directly to them on payment or early encashment.

Yes they can keep the funds in an ISA or any other account, until scheduled mge end (redemption ) date, although they should ensure that they are not paying more mge interest that what they will be receiving (net of tax) from any deposit account holding the funds.

Otherwise they should simply reduce the mge borrowings when the policy funds are recd (as long as there are no ERCs), otherwise they'll be down on the deal, as the mge interest they will continue to be charged until redemption will exceed what they are actually receiving over the same term if the hold the policy funds on deposit.

Bit of number crunching reqd !

Hope this helps

Holly

firesidemaid

Should they be keeping an eye on the variable values of these policies ie. could they cash them in earlier in theory?

also, did they ever have a mis-selling case that you know of?

holly_hobby

firesidemaid wrote: »

Should they be keeping an eye on the variable values of these policies ie. could they cash them in earlier in theory?

also, did they ever have a mis-selling case that you know of?

Being unit linked there is no penalty as such for early encashment (ie loss of terminal bonus), the variable is the no of units held and the corresponding bid price and fund value.

Mis-selling complaint would be with respect to suitability, not loss of expectation (which can't be compensated for).

Hope this helps

Holly

bob_dob

firesidemaid wrote: »

also, did they ever have a mis-selling case that you know of?

Thank you Holly, as ever.
Thank you Firesdmaid, they did have a mis-selling claim but did not heed the red letters. By the time I got involved they were time-barred. Extremely frustrating

Holly, does the fact that they get SMI alter your point about paying mge interest?

holly_hobby

Ah, forgot about the SMI they're in receipt of.

Scratch that then, yes technically they can deposit the proceeds and leave them to gain interest, until scheduled redemption.

However, morally if they should do that (leaving the tax payer to keep on paying mge interest, when they have the funds to repay the same amount of debt) is another thing, and if the receipt of the same funds don't of course affect their continued qualification for MT benefits such as pension credit etc, which would if lost would also remove their SMI receipt in any event.

H xx

firesidemaid

bob_dob wrote: »

Thank you Holly, as ever.
Thank you Firesdmaid, they did have a mis-selling claim but did not heed the red letters. By the time I got involved they were time-barred. Extremely frustrating

Oh that is a shame, and as you say very frustrating. i can imagine its difficult as it's not your parents, but how do you think their budgeting is generally, do they have buildings insurance and are they claiming everything they are entitled to?

I admire you for helping them.

bob_dob

firesidemaid wrote: »

Oh that is a shame, and as you say very frustrating. i can imagine its difficult as it's not your parents, but how do you think their budgeting is generally, do they have buildings insurance and are they claiming everything they are entitled to?

I admire you for helping them.

Holly, thank you so very, very much!!!

Thank you Firesidemaid too. Their budgeting is not the best Im afraid but they do try, in their own way. If they didn't then I wouldn't be helping (although it is you wonderful people who are actually helping).
Not sure about Buildings insurance, I will find out. Please can I ask why you mention that?

As for claiming, I managed to persaude my friend's mum to use entitledto.com and she says they have all they are entitled to, which is, I believ, council tax benefit, SMI and pension credit.

bob_dob

Hi,

Yes they do have buildings insurance. Phew. Please can I ask why you asked that?

Also, please can I ask how they can find out whether if the policy is assigned to the lender? Will they be able to simply ring up and find out, do you think?

Let_Us_See

Come on, lets move on with this. Forty nine posts and we are still hacking away at the periphery.

Main problem is that "parents" are £6,000'ish short of the required funds to redeem their mortgage at the end of the term. Simple. At their age an interest only (payable) lifetime mortgage immediately solves the problem and takes away the current stress. There is no rolled up interest to reduce long term equity as the interest is paid monthly, no term limit which enables them to save, as and when possible, to repay capital (if they want to).

Stop fudging and take positive action.

firesidemaid

bob_dob wrote: »

Hi,

Yes they do have buildings insurance. Phew. Please can I ask why you asked that?

Also, please can I ask how they can find out whether if the policy is assigned to the lender? Will they be able to simply ring up and find out, do you think?

i only asked as i thought seeing as they might have their heads in the sand about some things then they might about this important insurance too.