Endowement mortgage repayment.

[Pedro!]

Hi,

Not sure I am in the correct forum, but here goes,

25 years ago I bought a house with a mortgage from Bradford & Bingley, the type of mortgage I was recommended was a low cost interest only endowment mortgage.

6 years later I decided to move house and needed to borrow a further sum of money from B&B, this was added to my current mortgage and was covered by another endowment by a separate endowment company to the first endowment, and was, again due to mature in 25 years time.

I was told that these types of mortgages worked thus,

I paid interest only for 25 years and then the endowment matured and paid off the initial borrowed sum, any surplus was paid to me as a lump sum. I was relatively young at the time (early twenties) and didn’t really understand this sort of financial mumbo-jumbo.

Now, back to the present, my first endowment has just recently matured, it has made the target sum with a few hundred pounds surplus. The endowment company sent me a letter to ask if the endowment was still tied to a mortgage, if so could I supply them with the account number and they would send the cheque on, which I did.

After much phone calling, no paperwork, a lost cheque and no information by B&B, my local branch has finally got my endowment cheque. B&B head office explained to me that the surplus would be sent to me as a separate cheque by my local B&B branch.

During a recent phone call to my B&B branch an assistant informed me that usually the whole amount, including the surplus would go towards my mortgage, i.e. some of the second sum borrowed would be paid off, even though this is not due to be repaid for another 6 years.

I rang head office and they confirmed this, as, in their words I still owe them some money!

This does not seem right to me, In my opinion I have two contracts (in one) with B&B

• I will pay to them the first amount of money in 25 years when it is due; this is what I am now trying to do.
  
• I will pay the second amount of money in 6 years time which will then be the second 25year mortgage period end.

I do realize that this simply means that instead of getting my ‘few hundred pounds’ now I will get it in 6 years time when I pay off the second part of my mortgage i.e. when my second endowment matures, but,

What if I had told my first endowment company that the endowment no longer was tied to a mortgage and had the money sent to me and then went B&B and paid off the initial amount?

What if the endowment had made a few thousand extra, not just a few hundred, would they have still insisted the full amount went towards the second part of my mortgage which isn’t actually due to be paid yet, I may have had plans for that money.

How can B&B ‘call in’ any money to be paid on an agreement that is not yet due, is this not breaking the contract?

Could B&B suddenly inform me at any time they wish that would like me to pay some money on my mortgage, and perhaps scrutinize my savings account (with them) and insist I use that!?

Thanks for any advice, comments etc. I think this is very unusual.

Pedro!

p.s. I have never missed a payment, am in full time employment and have been for the full duration of my mortgage.

[mrsfoot]

First of all have a look a the contracts for both. I think it might say if there is any surplus from the endownment and you have any debt owing to them at that time they can then use that excess to reduce your 2nd loan

 

However if it is not stated on the contract then in my opinion they have to give it you

 

Contact CAB or family solicitor for more advice

[Pedro!]

Thanks mrsfoot,

 

I'll check the contracts.

[papadak]

I wondered if there is a link or forum for Endowement mis-selling?

[papadak]

Am I in the right place. I have a Mortgage endowement question? My ME is currently with the FOS and at Adjudicator level ... I shall continue if i'm in the right place???

 

Thanks