Sheepsplitter

I had a letter today confirming that my endowment mortgage was miss-sold to me. A bit of a result me thinks, and very quick action on their behalf as I only wrote to them 2nd October!
They've calculated I am £7500 out of pocket.

Anyway, I have 3 options:-
1. Take the money and add it to the endowment.
2. Take the money and do whatever I like with it (I'm thinking maybe take an ISA or something to add to the endowment when it matures?)
3. Take the money and cash in the endowment as it stands now (worth £6336 now).

I'm thinking option 2 might be best, using an ISA or something like that to boost the endowment later.

Any finanical advisor types care to comment on my choices?

In all circumstances I have to acknowledge that the company has 'righted the wrong' so I can't go back later and ask for more ;-)

Jolly Green Monster 2

Result..

I think option 2 is the best idea, although worth looking at cashing it in and getting a repayment perhaps if you can do that as rates are low at the moment? just my Humble opinion mind.

When were you sold it?

I think I was also miss sold mine and didn't think there would be much point arguing about it but maybe worth doing so after reading this..

Mine was sold to me in 99...

They have written to me advicing that it will probably not meet the target amount and that I should pay more into it.. more money after bad I thought so put the equivelent amount they wanted extra each month into a saving account instead.

Cheers

JGM

Sheepsplitter

I've had my mortgage 9 years.
The reason they felt they had to pay up is because they did not 'verify my atittude to risk' correctly.
Follow it up, there are millions of people who have been miss sold apparently.

Jolly Green Monster 2

Okay cheers I shall look into it.

JGM

Sheepsplitter

There is a load of advice and a facility for helping you generate an appropriately worded letter here:-
http://www.endowmentaction.co.uk/

Good luck.

apn70

Was this 'verify my atittude to risk' the only reason you gave? As I've just read www.endownmentaction and quite a few of the things apply to me.

Jolly Green Monster 2

Cheers for the webaddress..

Nothing really applies to me other than I wanted a repayment and the advisor talked me out of it saying that unless I wanted to move house frequently I would benefit better from an endowment..

and I now know that he was talking bollox and just after the commission...

Might follow it up anyhow.

JGM

Tiggs

good job lots of ppl are jumping on the end miss sold band wagon because what with the collapse in house prices and wacking great big interest rates ppl are FUBARed

red_dog104

Tiggs, what collapse in house prices?!

Edited as just re read your message and now wondering if there is a hint of sarcasm there!?!?!

[Edited by red_dog104 - 10/24/2002 2:09:21 PM]

ProperCharlie

Yeah I feel really sorry for all these people that thought they would make a tidy sum due to the well known fact that share prices go up and up and up, every single year, usually by 7.5% per annum but can be as much as 9% per annum . When some divvy salesman tried to run this by me I felt like asking him if I had c**t written on my head. Naturally, I asked for a repayment mortgage.

Jolly Green Monster 2

I was a neive little kid in 99... hence I took his word for it..
doh!

JGM

ProperCharlie

I think the worst thing is how hard they sold them. i remember me and my missus had to listen to *3 HOURS* of b*llsh*t before we eventually told him where to poke it. He was not very happy to see his commission disappear.

Mo

JGM,

surely this is enough to prove it was mis-sold

Jolly Green Monster 2

Looking back I had the same..

I am right in saying you can transfer any mortgage , repayment or endownment to a different property?

For example buy a house for 50k with a repayment mortgage
Move house and buy somewhere for 100k and take out another 50k mortgage... etc... he told me you could only take an endownment with you to another house..

JGM

Nigel H

Yup you can move it - just what I did, and I got another endowment at the same time to top it up

MarkO

You can even mix and match endowments and repayment loans if necessary.

Sheepsplitter

When I suggested the endoment was 'risky' to the advisor, he laughed. I questioned what if the stock market didn't keep climing or had a crash like back in the 30s-40s and he howled saying, "then the endowment will be the least of your problems".
I quoted all this in the letter.
I think the reason they paid me off so quick is in case I decided to tell the press ;-)

Jolly Green Monster 2

Exactly my understanding now... just wanted to check though..

I was told that I would have to pay interested again when I moved house as I would have to take out another repayment..

Eg.. 50k repayment.. spend first few years paying interest
move house.. amount outstanding 50k..
get mortage of 100k, spend first few years paying interest etc..

So he lied when he said I would _have_ to do that and I would be better getting an endownment.

Bu99er...

JGM

MattW

Edited to quote

That is technically correct.

With a repayment mortgage the mortgage is redeemed on sale of house a and a new one taken out on house b. In practice it's a load of bollocsk as you just end up with lots of smaller mortgages because the lenders have tie ins which mean redemption penalties.

99.99999% of the time the penalty is waived if you move house and stay with the lender, hence they open a new mortgage for the difference, usually on a different product.

The endowment is not linked to the house and is therefore fully portable.

[Edited by MattW - 10/24/2002 2:52:45 PM]

MattW

PS - I hope this endowment was not sold by the coy i work for

Jolly Green Monster 2

So if a repayment linked to the house then?

Perhaps I am being unjust then?

Cheers

JGM

Jolly Green Monster 2

Mine was sold to me by a company starting with L mate..

JGM

MarkO

A mortgage of any sort is linked to the house, since the lender holds a charge over the property.

However, if you want to move house, even if you stay with the same lender/mortage, you'll almost certainly end the current mortgage, clear it with the funds from the sale of the house, and start a new mortgage for the new property.

If you have an endowment you can take that with you (it's independent of the property) or you could even cash it in (if it's with-profits - unlikely at the moment!).

Jolly Green Monster 2

Okay cheers for clearing that up..

Sounds like he was actually not trying to pull the wool over my eyes then.

JGM

MarkO

Actually, it sounds like was trying to do exactly that, the way you put it.

Jolly Green Monster 2

??

MarkO

Basically, he's implying that if you move house whilst still in the initial 'interest-only' period of the mortgage, you'll be back to square one with a repayment, whereas you wouldn't with an endowment. There's 2 things wrong with this:

1. You're almost certain to take equity with you when you move, meaning you'll gain a bit of ground on the newer, larger mortgage.

2. With an endowment mortgage you'll also be back to square one in the scheme of things, on the basis that your endowment won't have reached profits yet, and you'll still be paying the interest only on the larger mortgage.

But I suppose it depends on how you/he worded it.

DAC

Sheepsplitter - who's your mortgage with

I've currently got a claim in with Norwich Union (who now own General Accident - who I took it out with)

had endowment 13 years - got letter saying similar to you - upto £7500 shortfall.

claims been with them 6 weeks and no actionn yet ?

hope I get same result as you.
I was told it would pay my mortgage and return a nice lump sum as well.

fat chance.

Jolly Green Monster 2

I think I understand you now..

He gave me the impression that I would not lose out with an endownment but would with a repayment if we moved at any point in the future.. whcih is obviously wrong then..

JGM

MarkO

And you believed them?