Endownment mortgage.

[tiggerblue10]

I have an endownment mortgage. Had it since 1991 and I will lose out by several thousand. I appealed to the ombudsman and received just over 3k a few years ago. The loss however will amount to more than what I got. Will I be entitled to appeal for more money?

[Ethel]

No. You will either have to extend the mortgage on a repayment basis, or overpay now.

Speak to your mortgage company.

[buildersmate]

You've been given a sum of money that compensated you for the difference between what you were told the investment return would be and what it ended up being up to the time 'warnings' started being sent out about shortfalls in returns (the mis-selling period).
For a number of years now annual 'warnings' have been sent out advising you to take action by upping your payments. Afraid you can't milk it for any more.

[tiggerblue10]

I'm not trying to milk it buildersmate, I'm just enquiring as to whether i would be entitled to anymore. I have converted some of the mortgage to repayment and I am trying to pay 4k off each year which I can do without with incuring any penalties.

[annie0000]

Hi tigger blue - the compensation that you received was calculated to put you in the same position as you should have been had you taken a repayment mortgage at the time of the sale. At the point of receiving the redress, you had to decide whether to transfer your mortgage to a repayment mortgage and guarantee that it would be repaid - using the compensation plus the policy surrender value to reduce the borrowing required, invest the money to put against your policy at maturity, or increase your payments appropriately. The insurance company would have paid the fees for you to transfer your mortgage if you wished.

Endowment mortgages often cost less per month than a repayment, so you have had the benefit of lower payments as well as the redress that you were given, unfortunately, you cannot now claim again.

It would be quite a complicated calculation, but it would be interesting to see whether you would still be in shortfall had the compensation been applied to your policy.

The way the redress is calculated is so that you can transfer to the repayment mortgage which you feel you should have been sold at the time. If you chose to continue with the endowment, then that was your choice at the time.

It is easy to say that now, when I am sure that you had a place for that redress money to go when it arrived.

Anyway, I hope that you manage to get it sorted out, but you would be wasting your time both with the company and FOS if you were to complain again.

Interestingly, there was a case recently where a Financial Adviser achieved a ruling where he would be entitled to be repaid the compensation paid to his customer should the policy meet it's target.

[tiggerblue10]

Hi Annie, thank you for outlining it for me. I live on my own and at the time all I could afford was an endownment mort. As I said I have converted some of it to a repayment mortgage and I'm trying to pay some of it off each year so I'm hoping that it sorts itself out when the the policy matures.

[annie0000]

Hope you get it sorted tiggerblue - if affordability in terms of taking out a repayment mortgage was an issue at the time of the sale, and this was your reason for taking out the endowment, you are lucky that you got the redress anyway, you have been compensated for having the wrong sort of mortgage for your profile (I am guessing that you did not want to take the risk that your mortgage would not be repaid) however, actually you should never have been given the mortgage you took in the first place. That is more to do with the lending criteria of the lender rather than the fact you have an endowment policy with a life company. If you feel so inclined, you could maybe challenge the fact that you were given a mortgage you could not afford. However, bear in mind what you would do if they agreed and then removed your borrowing entitlement!

[baileybird]

did you genuinely not understand when you purchased or just chose the cheapest option

[Petal~flower]

tigger I am in a similar situation to you, though I am still on an interest only mortgage. It confuses me totally

[tiggerblue10]

Thanks Annie.

Hi Petal, it is a nightmare I agree. x

baileybird, I purchased the mortgage in 1991. I was 20 at the time and didn't know any better.

[annie0000]

Hi guys - not that I am in a position or registered to give finanial advice but, if you really want to guarantee that your mortgage is repaid, the only way is to take a repayment mortgage. If affordability is an issue, you could always extend the term. Having said that, at the moment the stock market is doing better and you may find that the likliehood of your policy paying out has increased.

Having said that, my husband has 25 year policy that matures this year - for a small amount and despite the fact that it was started 25 years ago and should have done a lot of its growth when the market was doing really well, it will not reach it's target. As it is for a very small amount and has not been tied to a mortgage for many years, that doesn't matter too much, but it has been spectacularly mismanaged!

[tufty7]

Must admit tigger I took one out in 1989, it was recomended and the woman at the abbey national said there would be enough for a small car as well when it comes to fruit , well it will be a vary small car indeed... and probably a corgi one...lol I too claimed and "won" an amount, but was dissapointed and changed to a repayment one, I am using the endowment as a savings vehice now for a rainy day , perhaps it will pay for a shopping trip to marks and spencers when it comes up.......

[tiggerblue10]

I was told the same thing tufty. They said I'd be able to pay off the mortgage at the end and have some left over. A couple of years after I got mine it all went t!ts up!