I sold a property in November 2008. When the final count was made, my lawyer in Halifax asked for an additional £2,695 to close the mortgage.
We were in Australia so my now deceased father-in-law went to my lawyer with the money and the sale was completed.
Over the years many debt collectors have said I owed £5,000, although each time my lawyer assured me that they had settled it.
Historical Debt: A reader is being harassed by Halifax for a mortgage loan attached to a property sold 13 years ago
On his advice, I approached the Financial Ombudsman. Halifax then said that my lawyer had not paid the extra money and thus it was still owed.
KA, Hilton, Cambs.
Tony Hazel replies: Your final mortgage redemption statement from Halifax shows £2,695 outstanding.
A letter from your lawyers at the time indicated that it was a surprise and said they needed a check immediately.
But what happened next?
Halifax says it received £166,000 when it needed £168,012.50 to close the mortgage. This waived off a small insurance premium, leaving a reduction of £1,988.61.
It had agreed to waive the early redemption penalty of £3,230 if the mortgage was fully redeemed by January 2009. But when this did not happen, the outstanding amount increased to £5,218.61.
The mortgage was closed in December 2008 and the fee was removed when it was sold.
Your lawyer argues that if Halifax had not received the money, it would not have done so. But Halifax says that’s not how it operates. What actually happened was that the debt was passed for recovery.
Halifax says if solicitors can provide proof of payment, it will investigate further. There should be financial records and the money paid by your father-in-law should go to the customer’s account.
But you tell me the solicitor says he can’t find any records and you should tell Halifax to go. That advice is neither professional nor in your best interest.
I went back to Halifax making a strong case that you were clearly caught in the middle and that it might have accepted a partial payment as a compromise.
But Halifax has gone further. A spokesperson says: ‘Given all the circumstances, we are going to be in a better position to waive the entire amount and have advised the collection agency accordingly.’ It’s really going above and beyond, very well done, Halifax.
Prudential’s tax hazard on bond withdrawals
In October 2000 we invested £21,200 in a Prudential Prudence bond and up to £10,600 in May 2001.
We have received 5 pcs payment annually. Pru says that if we continue with our current level of withdrawal after October 30, we may have to pay additional income tax.
The only way to avoid this would seem to be (a) reduce the amount we charge annually; or (b) make no withdrawal in 2021-2, then withdraw in alternate years.
We both pay tax at the standard rate. The financial advisors we have contacted have refused to accept us as clients because of our age – 87 and 83.
Tony Hazel replies: Nice to know that your local financial advisor is taking their responsibilities seriously!
Clearly you don’t have enough money to make them feel like it’s worth dipping into your pocket.
Once I’ve gathered more details about your income, I’ll turn your issue over to Danny Cox of Hargreaves Lansdowne, who is very well versed in investing like this.
5% of your annual income over 20 years is treated as your return of capital. The present value of the bond is £32,297, so there is a profit of approximately £16,000 every 20 years.
Neither he nor I can see any impediment to you withdrawing as much as you want without paying additional tax. Profits within the bond are already taxed at the principal rate.
When deciding whether additional tax needs to be paid or not, the profit is allocated over the number of years you have invested.
You’ll only pay additional tax if the final figure pushes you into the higher band, which starts at £50,000 in England and Wales.
You tell me your only other income is your state pension, so you would have to make a heck of over £16,000 over 20 years to face the tax bill.
Mr. Cox says as long as you have no other income you can take your 5 percent without any tax worries.
But he added: ‘Given their returns, a bond is taxed at source, why not cash, put it in an ISA and not have to worry about taxes on future income or gains?’