20.6 Endowment Scenario 6 - Redress Manager 2023

Redress Manager 2023
Endowment Scenario 6

Deferred Interest Rate

Mr T Martin

24^th April 2010

Dear Sir / Madam,

Based on the advice from my financial advisor, I took out an endowment mortgage. The advisor strongly advised me to take an endowment mortgage over my choice of repayment. I did and still do consider that I was given bad advice.

Since taking out my first mortgage I have increased my loan and have changed lender. Standard MIRAS applied throughout my mortgage term, the details are as follows:

UCB Home Loans	£72,000
Completion date	1^st Feb 1989
End date	30^th Jan 1995
Term	25 years
First payment made	1^st March 1989
Endowment premium	£115.00 from 01/02/1989 for 25 years
Surrender value 24^th April 2010	£45,702
Deferred Rate	-3% deferred 1^st year
	-2% deferred 2^nd year
	-1% deferred 3^rd year

Loan Halifax Plc	£15,055 increase
Completion date	30^th Jan 1995
End date	24^th April 2010
Term	19 years
First payment made	1^st March 1995
Endowment premium	£23.72 from 30/01/1995 for 19 years
Surrender Value 24^th April 2010	£13,635

I look forward to receiving your reply, advising me of how to take this forward.

Yours faithfully

Mr T Martin

The decreasing term assurance payment would have been £13.50 from 01/02/1989 for 25 years and £3.62 from 30/01/1995 for 19 years.

No MIRAS is applicable to the second calculation as the full MIRAS allowance is allocated to the initial advance (calculation 1).

NB To produce the calculation you will need to input the deferred rate using the payment rate % adjustment.

Our understanding is that many lenders only offered the deferred option under the interest only mortgage. This case has been based on a repayment comparison using the variable rate only. It is advisable to check with the lender if a comparable product would have been offered on the repayment method.