A really bad example of mis-selling of an endowment policy is a person I know that got a 10 year morgage with an endowement policy to go with it. 9 years into the morgage he realised he'd been sold a 20 year endowement policy. He tried to find the broker and it turned out he was in prison for fraud.
Surely the mortgage itself was interest-only and as such open-ended. What makes a repayment mortgage an X-year mortgage is the repayment schedule (essentially the overpayment margin). An interest-only mortgage doesn't have an overpayment margin, and so what makes an endowment mortgage an X-year mortgage is the endowment itself. So there is no such thing as a 10-year mortgage with a 20-year endowment. If it's a 20-year endowment, it's a 20-year mortgage.
Presumably what you mean is that he asked for a 10 and got a 20.
"Endowement" makes a change from "endownment".
Yes, the morgage was interest only, but he had asked for and got a 10 year morgage. Open ended or not, he had a whole lot of paperwork that said he had to pay the full amount owed before a set date, which was exactly 10 years duration. When he realised what had happened with the endowment he tried to find the broker that had arranged the endowment who however was unavailable due to serving a long stretch in jail for financial fraud and car theft. The morgage company did eventually agree to extend the morgage to 25 years, but were not to keen about doing so.
How extraordinary. You'd have thought they'd jump at the chance of earning interest for longer. Or was your frined about to retire?
What complicated it was that he wanted to move to another town after the 10 year period was up, and live with his fiance. He had already stopped living at the house and was letting it, but at that time (about 11 years ago) the morgage company was quite anti letting. Each time he renewed a tenancy they would charge a hefty admin fee and they also added half a percent to the repayments. He got into a real strop about it, writing letters of complaint to just about everywhere. Eventually the building society agreed he could have it as a 25 year morgage and let it continuously without further consultation with them, so long as he would agree to keep it insured to the necessary level.
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