endowment help please

plymouthbear

I am trying to save money in any way i can at the moment . After reading many of the threads in this forum i have decided to post this information.
In feb 05 i took out a mortgage for 42,900 over nine years to coincide with the maturity of my endowment and two home plans. The mortgage is 32,000 interest only and 10,900 repayment.I have a fixed rate of 5.29% until 31.03.2010
61 payments of 268.14 then 47 payments at a variable rate.
At the end of of the mortgage term i will still owe 32,000. I have the following repayment vehicles :
All three policies are with Standard life. I have todays figures for policies A & C and 11th Nov 07 figures for policy B as they were unavailable for some reason.
Policy A : Start date 11th July 1988, monthly premium 37.90 sum assured 9,750 declared bonuses 6,902 surrender value 15,536 maturity date 11th July 2013
forcast 3.75% 20,000 5.5% 21,700 7.25% 23,600 Target 30,000

Policy B : Start date 26th Nov1996, monthly premium 18.67 sum assured 5,000
Homeplan no bonuses, surrender value 2,940 maturity date 26th Nov 2012
Nov 2007 forcast 3.75% 4,410 5.5% 4,780 7.25% 5,170 Target 5,000

Policy C : Start date 11th Nov 1993, monthly premium 10.00 sum assured 3,945
Homeplan no bonuses, surrender value 2,091 maturity date 11th Nov 2012
forcast 3.75% 2,820 5.5% 3,040 7.25% 3,270 Target 3,945

Can somebody please tell me if i should hang on to these policies or surrender/sell them.. What makes best financial sense . I am far from being an expert in this field and would welcome any comments. Please let me know if you need any more info.
kind regards, Plymouthbear

EdInvestor

plymouthbear wrote: »

Policy A :
forcast 3.75% 20,000 5.5% 21,700 7.25% 23,600

If you cashed this one in and used the lump sum and the premiums to increase payments on your mortgage to maturity your eventual guaranteed no-risk return would be 22,710.Unlikely that SL will match that. Suggest you see if someone wants to buy this policy here: https://www.apmm.org

The other two policies can;t be sold.

Policy B forcast 3.75% 4,410 5.5% 4,780 7.25% 5,170

If you proceeded as above with this one the return would be 4,628.Not such a high target.But you need to check the figures on this one as the markets are very volatile at present.

Policy C forcast 3.75% 2,820 5.5% 3,040 7.25% 3,270 !!/quote]

Your return with this one would be 3,104, very similar result to policy A .

It boils down to risk premium: with an endowment you are hoping to beat the guaranteed return on cash interest or repaying debt by taking a risk in the stock and money markets.You expect a premium return on top for taking that risk. IMHO the risk premium even if these policies meet the top forecast is not adequate reward for the risk they might come in under the lowest forecast on something as fundamental as a mortgage.

plymouthbear

thankyou for the advice and quick reply edinvester.
sorry to sound a bit of a duffer but can you please explain : (If you cashed this one in and used the lump sum and the premiums to increase payments on your mortgage to maturity your eventual guaranteed no-risk return would be 22,710.) Do you mean to use the cash raised from the sale of the policy to pay off that part of the mortgage, then have the remainder on repayment? wouldnt this mean higher mortgage premiums ? also i understand the other two cant be sold , but can they be surrendered.
also the wife and i have other life cover in place.
kind regards, plymouthbear

EdInvestor

plymouthbear wrote: »

Do you mean to use the cash raised from the sale of the policy to pay off that part of the mortgage

Yes.Plus increase the ongoing monthly mortgage payment by the amount of the endowment premium, thus overpaying the mortgage. No need to switch to repayment - overpaying the I/O mortgage is more flexible and cheaper.

plymouthbear

ok. im still a bit mixed up. supposing i sell for 16000. i then pay off that amount of my mortgage which will leave 16000 plus 10900 . do i just add these two amounts together and get an io mortgage for that amount? if i pay interest only amounts how does the balance get paid at the end of the mortgage. could give me a step by step guide please. sorry but i just find these things very difficult to understand.
thankyou for your help so far. plymouthbear

EdInvestor

plymouthbear wrote: »

ok. im still a bit mixed up. supposing i sell for 16000. i then pay off that amount of my mortgage which will leave 16000 plus 10900 .

You don;t need to worry about the 10,900 as that's on repayment and will end up as nil at the end anyway.

If you sold/surrendered the endowments, you would use the lump sums to reduce the I/O mortgage.then you would increase the monthly I/O mortgage payment by the amount of the premiums on the endowments, which you are no longer paying into.

That is, the existing endowment payments are diverted so as to "overpay" the I/O mortgage.This will reduce the amount of interest you pay on that loan, making it cheaper to repay overall. There is no need to get a new I/O mortgage.

Doing it like this may not wholly cover the shortfall - depends on what happens to interest rates over the period.You may need to extend the mortgage term a bit or top up the payments - but you would have to do that anyway if you switched to repayment.It's likely to be cheaper instead to overpay your existing I/O loan.

Danielle_W

My husband and I wrote to the Financial Advisor who sold us our endowment policy 3-4 years ago saying we believed we had been mis-sold. We went through the correct procedures and eventually ahd to write to the Ombudsman.

This has been an ongoing thing all this time with first been told that the company had to pay us a lump sum, they objecting and the decision being overturned, to us objecting and a final review. Have had the final review this morning with the Ombudsman saying that they agree with the company. There has been many things happen in our case, the company originally claiming they had no paperwork until the Ombudsman asked for it, their documents being different to ours, new evidence appearing without reference to us, the case getting put to the bottom of the pile when someone left and top and bottom of it is our word against theirs.

We can not afford to go to court but still feel that we had a valid case and that the decision is not right. Are there any more steps we can take? Can we go to a company?

This is basic information and would appreciate some advice from someone in the know

With thanks

dunstonh

We can not afford to go to court but still feel that we had a valid case and that the decision is not right. Are there any more steps we can take? Can we go to a company?

You have exhausted all avenues now apart from court action. (assuming the last review was actually done by an ombudsman themselves).

The FOS do generally follow what a court of law would although they do slightly favour the consumer on the basis that the FOS totally disregard certain documents that carry risk warnings whilst the court may not.

A claims company is highly unlikely to be interested at this stage as they only do what you have done and to get to the stage of a final review by an ombudsman leaves the claims company with no other option available.

Having an endowment is not a mis-sale. If the rules were followed that were in place at the time (not rules in place now and that is important to remember) then even if the endowment is totally naff, you will not get the complaint upheld. If rules were broken in certain areas but they are not key to the suitability then the complaint can still be rejected. Some people focus on areas that really have no hope of success but think if they can show one bit was wrong then it will be overturned.

Remember, what you are saying here is that the person that sold the policy broke the rules and lied to you. Thats a strong allegation. So, anyone reviewing the case is going to look at your evidence vs the evidence on file. What was your evidence and how strong was it?

Danielle_W

About the only evidence we have that we did not sign the papers that the advisor had put all the information on. We did not even go through them to check that what he ahd put on was correct. There is a policy on that we do not know what it is.

As I have said it is his word against ours. he did tell us the endowment would cover the mortgage but not necessarily get a lump sum. He assessed us as prepared to take a risk but considering we were only 21 and 22 at the time with very little deposit and no reason to buy then (we were plannign to get married but could have delayed this as we were not planning to live together) had no loans etc no debt we felt that we were not prepared to take a risk. Also he told us we could only have an endowment mortgage he never discussed other types etc and only one company was mentioned. Again it is all our word against his.

He was a family advisor at the time so had no reason to disbelief what he was saying. He has even misadvised the rest of my family but I am aware that this can not be taken into account.

Our certificate of the endowment is completely different to his. It seems a lost case but we wonder why it was ruled in our favour intitially (and speaking to the Ombudsman on the hone always in our favour) and then there was a huge u-turn. The new evidence has never been presented to us. The bloke who was working on the case even left without any word to us to indicate that a new person would over see the file. It appeared to be forgotten about.

We were told it would go to an adjudicator but it looks as though it still hasn't been put in front of one.

As you can see we are very digsruntled

Danielle_W

About the only evidence we have that we did not sign the papers that the advisor had put all the information on. We did not even go through them to check that what he ahd put on was correct. There is a policy on that we do not know what it is.

As I have said it is his word against ours. he did tell us the endowment would cover the mortgage but not necessarily get a lump sum. He assessed us as prepared to take a risk but considering we were only 21 and 22 at the time with very little deposit and no reason to buy then (we were plannign to get married but could have delayed this as we were not planning to live together) had no loans etc no debt we felt that we were not prepared to take a risk. Also he told us we could only have an endowment mortgage he never discussed other types etc and only one company was mentioned. Again it is all our word against his.

He was a family advisor at the time so had no reason to disbelief what he was saying. He has even misadvised the rest of my family but I am aware that this can not be taken into account.

Our certificate of the endowment is completely different to his. It seems a lost case but we wonder why it was ruled in our favour intitially (and speaking to the Ombudsman on the hone always in our favour) and then there was a huge u-turn. The new evidence has never been presented to us. The bloke who was working on the case even left without any word to us to indicate that a new person would over see the file. It appeared to be forgotten about.

We were told it would go to an adjudicator but it looks as though it still hasn't been put in front of one.

As you can see we are very digsruntled

dunstonh

About the only evidence we have that we did not sign the papers that the advisor had put all the information on. We did not even go through them to check that what he ahd put on was correct. There is a policy on that we do not know what it is.

It doesnt need to be signed. I dont get my factfinds and research signed and most do not. So, forget trying to use that as a reason as its a dead end.

Also he told us we could only have an endowment mortgage he never discussed other types etc and only one company was mentioned.

There were some deals in the 90s which were endowment only. Obviously they were a minority but they did exist. Also for a while there was MIRAS (tax relief) on mortgages which favoured endowments more than repayment mortgages and typically endowment mortgages were cheaper by as much as 10% compared to repayment mortgages. Often there were very good reasons for doing an endowment.

we wonder why it was ruled in our favour intitially (and speaking to the Ombudsman on the hone always in our favour) and then there was a huge u-turn.

It happens. Some of those that do the initial checks are really not up to the job. Sometimes they rule in favour of either side based on flawed data or opinion. The right to appeal that further works both ways.

I havent had a complaint but I get given information about complaints going through at various compliance meetings to help us understand how to protect ourselves against fraudulent and opportunistic complaints. One of those meetings last year it was said that someone at the FOS was automatically ruling all cases in favour of the consumer when a certain network was involved whether it was right to or not. When it was highlighted, the FOS dismissed that person and all the cases done by him had to be reviewed again and a number of those were overturned in favour of the adviser.

As you can see we are very digsruntled

I think your problem is that you havent got any evidence of mis-sale and a few of the things you mention (such as no sig on factfind) are not issues and documentation appears to exist that supports the sale of the product.

Remember that most endowment complaints are rejected as valid sales. The majority of those paid up on are not upheld but are paid redress as documentation is missing, incomplete or not worded appropriatly. So, if the documentation does exist and supports the sale with the rules that were in place at the time then you are going to find it hard to get redress if you have no evidence otherwise.