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Old 10-07-2020, 10:01   #1
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Mortgage and house insurance advice

My FiL passed away on Tuesday and he handled all their finances.

They paid their mortgage off around 20 years ago, but my MIL has discovered statements detailing that they now owe 28k!

Apparently, for 20 years, Halifax have continued to bill the home insurance against the mortgage account but not take any payment, so it's been racking up between £700 and £900 a year in insurance and is now racking up a similar amount per year in interest.

How is this even possible? How can they not take an annual payment and let the amount rack up like that?

Seems extremely irregular and underhand as well as bordering on illegal.

He wasn't the best with money, and did receive an annual statement, but I can't believe they wouldn't chase him for the money at some point.

Unfortunately we can't ask him, and as he's been suffering with dementia for some time, I doubt he'd remember anyway.

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Old 10-07-2020, 13:36   #2
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hey, just to confirm, your FIL passed (as you mention later he has dementia?)

Sorry for your loss

it sounds strange to put an annual fee onto the mortgage. So i'd see what documents and statements you have and try and call them on your MIL behalf (she may need to speak first to confirm you are authorised to deal with it, assumg she is on the mortgage?)

Or if now died, who is executor? MIL i assume? so need to write on her behalf to find exact amount and it may need to be paid from his estate - but if he is gone and no assets beyond house (which one hopes he owned as joint tennants with MIL) then debt dies with him.
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Old 10-07-2020, 13:49   #3
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Yes, sorry he passed on Tuesday.

I'm trying to sort it out for her, it's complicated by the fact that his surname is wrong on the mortgage, although hers is correct (same name!)

It appears that when the mortgage was paid off they stopped taking payments (as you'd expect), but then continued to add the insurance premium each year, not taking a payment and then compounding the interest.

I'm sure that practice of adding the insurance onto the mortgage account isn't allowed anymore, as it extends the mortgage artificially.

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Old 10-07-2020, 14:28   #4
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at least if she is on it, she can talk to them.

I'd at least get them to confirm the position is as you believe and that they are allowed to charge the insurance to the mortgage. And £700 insurance seems alot! worth a complaint once you know crrect position.

they can;t redeem the mortgage and then add more stuff to it, maybe to that account but surely the charge against the house is gone so its just an unsecured creditor then?
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Old 10-07-2020, 14:36   #5
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at least if she is on it, she can talk to them.

I'd at least get them to confirm the position is as you believe and that they are allowed to charge the insurance to the mortgage. And £700 insurance seems alot! worth a complaint once you know crrect position.

they can;t redeem the mortgage and then add more stuff to it, maybe to that account but surely the charge against the house is gone so its just an unsecured creditor then?
Yeah, unfortunately we're waiting on a few things and they are switching the account to MIL's name only.

We've got to wait for the death certificate etc.

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Old 10-07-2020, 21:41   #6
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Sounds about right from them, my parents premiums were about that but not on the mortgage. It goes back to an age where you had to have the insurance that the Halifax provided or they'd be a pain in the arse to let you have anything else. And people didn't shop around.

Did they get an annual renewal stating the price and that they could shop around?
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Old 10-07-2020, 23:11   #7
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Sounds about right from them, my parents premiums were about that but not on the mortgage. It goes back to an age where you had to have the insurance that the Halifax provided or they'd be a pain in the arse to let you have anything else. And people didn't shop around.

Did they get an annual renewal stating the price and that they could shop around?
Yeah, we have at least one statement, no mention of shopping around for a better deal, probably because of the outstanding balance.

I have no issue with Halifax pushing their home insurance, or it being a bit of an excessive premium, just the way it was added onto the mortgage account and continued to be after the mortgage had been paid off, and with allowing no payments to be made since.

Bit of background, the debt now is almost three times the original mortgage value.

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Old 11-07-2020, 12:40   #8
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I'd start gathering evidence on this, get them to provide what they've got, etc. Unless they live in a mansion, that's an extortianate home insurance premium.

Have they got any info that the mortgage was paid off except stopping paying it? Any redemption statement, etc? Sorry I've never paid mine off so not sure what you should get, maybe someone richer can advise?
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Old 11-07-2020, 13:03   #9
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Originally Posted by jockosjungle View Post
I'd start gathering evidence on this, get them to provide what they've got, etc. Unless they live in a mansion, that's an extortianate home insurance premium.

Have they got any info that the mortgage was paid off except stopping paying it? Any redemption statement, etc? Sorry I've never paid mine off so not sure what you should get, maybe someone richer can advise?
I know the premium is ridiculous, but as I said its the compound interest I'm more concerned about.

Halifax have confirmed that the mortgage was paid off, but I can't find any paperwork.

They're sending some stuff through, but only dating back to 2013 for some reason

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Old 11-07-2020, 13:16   #10
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They only need to keep things for 6 years I think.

Have the Halifax got a charge on the property? Did they get the deeds and such back? Is this how they were insured? did they ever make a claim?
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Old 11-07-2020, 13:16   #11
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They only need to keep things for 6 years I think.

Have the Halifax got a charge on the property? Did they get the deeds and such back? Is this how they were insured? did they ever make a claim?
As far as I know, never made a claim, I think I saw something about the deeds being held in some Deed Store or something at a £150 pa charge.

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Old 18-07-2020, 16:41   #12
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So the mortgage AND home insurance was with Halifax ? Or just the insurance was with them but they billed it to the mortgage account ?

Surely the mortgage account was closed, when it was paid off, and nobody should have been able to make any further charge against it without a red flag being raised ?
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Old 18-07-2020, 17:05   #13
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So the mortgage AND home insurance was with Halifax ? Or just the insurance was with them but they billed it to the mortgage account ?

Surely the mortgage account was closed, when it was paid off, and nobody should have been able to make any further charge against it without a red flag being raised ?
Both were with the Halifax.

I don't think the practice is allowed any more, but having spoken to them, basically every year the insurance was added onto the mortgage account and then payments were taken.

When the mortgage was paid off the payments were stopped, but the insurance was continually added and interest accrued, something to do with it being a Deed Store mortgage.

I rose a complaint over the phone and part of that was a "how would you like to see this resolved", basically we said that my MIL is happy to pay the insurance cost (even though the premiums were ridiculous) because the service was provided, but not the interest

We will see what happens.



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Old 18-07-2020, 22:06   #14
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I'd suggest they might be on incredibly shaky ground and might take that deal, to keep adding to a mortgage with no payments being made? Seems dodgy and doesn't sound right.
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Old 20-07-2020, 07:20   #15
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I wouldn't be offering to pay anything, it sounds like Halifax messed up - there's the potential that it's only the last 6 years they could ask you to pay too.

I'd seek professional advice if they are wanting payment.
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Old 20-07-2020, 07:51   #16
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Thanks.

We're waiting for a fair bit of information back from them at the moment.

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Old 20-07-2020, 12:14   #17
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I wouldn't be offering to pay anything, it sounds like Halifax messed up - there's the potential that it's only the last 6 years they could ask you to pay too.

I'd seek professional advice if they are wanting payment.
If the situation is as described (not suggesting it isn't btw but I find it extraordinary that the only comms has been an annual statement as the repayments would have gone into arrears and then default many years back) then I would amazed if they didn't apologise and write it off.

If they don't then I am confident that the ombudsman would tell them to.
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