Welcome to the forum ailsy.

This must be a huge worry for you.

My understanding is that there are two elements to an endowment mortgage.

The first element is a mortgage, which is likely to be interest-only.The second element is the endowment policy, which is an investment. The intention is that the investment will repay the mortgage at a determined point in the future.

An investment could be an asset that "vests" in the trustee when a trust deed is signed. To put it another way, by signing a trust deed your husband gives control of his assets to the trustee to help repay his debts. If he's named on the endowment and the funds are due, the trustee could feel obligated to use his share of the value of it to help repay his debts.

Is the endowment assigned to the mortgage lender do you know?

Was the trustee made aware of this endowment policy when the trust deed was signed? Were they aware that it would mature during the trust deed?

I have to send the endowment policy down to Manchester so they can read the wording. It is a Prudential Homebuyer's Endowment Plan. Its only a part of the mortgage as the other parts are later pay-back sums. I don't know if the trustee was aware of this policy. I requested a solicitor to help me read the trust deed document but couldn't find anyone to do this. Also, if the trustee's take half the money, and I then have to find the shortfall, then do I then own that part of the original mortgage?

I think that the wording will be important.

I'm afraid I don't understand your question at the end of your post. I don't know what you mean by owning the mortgage. Do you mean owning your house?

Basically, if my husband's share of the fund is handed to the trustee, and I have to then pay his share to the endowment, do I then own 3/4 share of the house rather than half? Or does his trustee still have an interest in half share of my house?

Hi Ailsy

It must be awful being faced with this and should never happen if correct advice is given in the first place, which I realise must be of no consolation to you.

Is the endowment policy definitely in joint names?

It may well be that you will need to find a way of dealing with the shortfall on your mortgage that is created by this. If so, then your mortgage lender is probably the first place to speak to as they may be willing to come to an agreement for the sum to be repaid over time.

Yes. Definitely in both names. I also wondered from the last reply if the trustee 'may feel obligated' meaning they may not take exactly half of the funds from the matured endowment?

They would need to take his full half of the funds - unless a lower amount would be sufficient to clear the debts in full plus interest plus the trustee's costs and outlays thus far.

In answer to your previous post, any equity contained in your house is separate from the value of the endowment policy I'm afraid. However, there should have been a written agreement prior to the Trust Deed being signed in respect of how equity would be gathered in. Do you have a copy of this? It is called a Form 1B.

Hi Kevin,

What would happen if the endowment policy is assigned to the mortgage lender?

I'll have a look for Form 1B.
Thanks.

If the endowment policy is assigned to the mortgage lender then it will be paid to the mortgage in full on maturity. This will just have the effect of increasing the equity in the property instead by the same amount, ailsy's husband's half share of which is likely to be required by the trustee. So the net effect is the same.

However, it will be interesting to know what the Form 1B says, as it is a binding agreement setting how much is required to buy out the trustee's interest. If Ailsy's husband has complied fully so far an not broken its terms then he might have an argument to say that the Form 1B agreement still stands, regardless of an assigned endowment policy maturing.

I doubt it would pan out this way in reality though to be honest, so wouldn't wish to get hopes up.

Kevin, the Form 1B says ' I, (name of trustee) agree that, on payment of the amount of £2,400 by 12 payments of £200 by 30/06/2020, I will: not realise the property at (my address) which is owned, or part owned, by (husband's name) which has been conveyed to me under the terms of the trust deed granted by (husband's name) and...relinquish my interest in this property*
then my husband's bit that says: he (husband's name) agrees to pay the agreed amount to relinquish the trustee's interest in my/his property. (Address and same date)

OK, that's good - there is a clear agreement in place regarding the equity in the property. Next step is to find out whether the endowment policy is assigned to the mortgage lender or not. Prudential should be able to confirm that for you.