Questions of Cash: Why has my mortgage became a moving target?


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Q. In 2007 we had an interest-only mortgage for £48,000. This was covered by two endowment policies: a 25-year policy for £32,000 maturing in 2014 and a 20-year policy for £16,000 maturing in May 2016. We received "red" warning letters on both.

We went to Cheltenham & Gloucester. The agreed remedy was to take out a smaller interest-only mortgage, putting the balance on to repayment terms. We expected, between the two policies, a return of £32,000.

Details of the policies were noted separately on the application form. The maturity date of the first one was entered as the expiry date of the interest-only part of the mortgage.

In May 2014 we were asked to pay the balance of £8,100. The first endowment policy returned £24,000, which was paid in its entirety against the mortgage, and the second policy is on target for £10,000, leaving us with an excess of £2,000.

Cheltenham & Gloucester does not believe the second policy should be counted against my mortgage. It has also involved a company called NCI. I rang NCI before it made a scheduled "site visit". The representative agreed with me and recommended that Cheltenham & Gloucester change the expiry date of the mortgage to the correct date. Cheltenham & Gloucester ignored him and charged me £40 for the site visit. I have told it that it must either change the expiry date, or ask me to take early redemption of the second policy, with it covering any cost. It has failed to respond. TS, Oxfordshire

A. Cheltenham & Gloucester ceased to be a building society in 1995, when it was acquired by Lloyds Bank. In recent months, much of its business has been transferred into the now separate TSB. We contacted Lloyds, which told us that your account was now with TSB. We then contacted TSB – which (correctly) referred us back to Lloyds, saying that your account was still with Lloyds. When we eventually made contact with the right people, we obtained a result – the £40 charge has been cancelled and compensation of £300 will be paid to you.

A spokesman for Lloyds says: "We have contacted [the reader] and agreed a way forward to align his endowment policies with his mortgage. We acknowledge that the level of service we provided did not meet expectations and apologise for this. We have also offered a payment to [the reader] in recognition of the inconvenience."

Q. I have some defined benefit final-salary pension scheme entitlement, with protected rights. But I was forced to join a defined contributions pension when the defined benefits pension scheme was closed. I also have an additional voluntary contributions (AVC) policy.

On being made redundant from that company, I joined the NHS. From April 2015 most NHS employees will be in a "career average" scheme, including me. Should I transfer both my defined benefits and defined contributions pensions to the NHS scheme? If I transfer one, I have to transfer both. Should I also transfer the AVC pot? RK, by email

A. Tom McPhail at the adviser Hargreaves Lansdown says: "The first question to ask is what level of benefits you are being offered by the NHS if you do transfer. I see no issue in putting all your eggs in one NHS pension scheme basket; it is probably more secure than most. The career-average plan is generally considered poorer than final salary.

I suggest you obtain a transfer value for your old workplace pension, and find out from the NHS what terms it would offer. Then get help from an independent adviser."

Questions of Cash cannot give individual advice. But we’ll do our best to help if you have a financial dilemma. Email us at:

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