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  • FIRST POST
    • Rosie1978
    • By Rosie1978 20th Apr 17, 12:34 PM
    • 122Posts
    • 313Thanks
    Rosie1978
    Something seems dodgy about this?
    • #1
    • 20th Apr 17, 12:34 PM
    Something seems dodgy about this? 20th Apr 17 at 12:34 PM
    Hello,
    I need some more advice and would be grateful if anyone could help. Without giving too much detail, my DB took out a loan for £19k ten years ago with exp.
    They since split, exp has new child and zero financial acumen - but they are stuck paying off this loan together and they do so religiously in fairness.
    However, I've just spoken to DB and it seem they have already paid £24k so far... OK interest, I get that, but that the loan still runs for a further 18 years? The bank says the only solution is to get a loan elsewhere and pay it off but that links him still to his exp and that is a very poor idea.

    Does this sound weird to anyone else? Without being rude, neither of them are financially savvy and I struggle to believe they would have signed up to this had they fully understood the consequences?

    I know you have to take responsibility but the loan is already paid by £5k over - and another 18 years of payments? This is a bank not a paydayloan type place I should say.

    Bank has advised him to complain to the ombudsmen.

    Any opinions greatfully received!
Page 1
    • ViolaLass
    • By ViolaLass 20th Apr 17, 12:39 PM
    • 4,971 Posts
    • 6,844 Thanks
    ViolaLass
    • #2
    • 20th Apr 17, 12:39 PM
    • #2
    • 20th Apr 17, 12:39 PM
    What was the interest rate?
    • zx81
    • By zx81 20th Apr 17, 12:41 PM
    • 12,475 Posts
    • 12,639 Thanks
    zx81
    • #3
    • 20th Apr 17, 12:41 PM
    • #3
    • 20th Apr 17, 12:41 PM
    Depending on the rate and term, it's entirely possible. Certainly nothing dodgy or weird about it.

    A 28 year loan is going to generate bucket loads of interest.
    • Rosie1978
    • By Rosie1978 20th Apr 17, 12:49 PM
    • 122 Posts
    • 313 Thanks
    Rosie1978
    • #4
    • 20th Apr 17, 12:49 PM
    • #4
    • 20th Apr 17, 12:49 PM
    Uh-oh, I've just found out it's a Coventry 'Moregage'.....
    • Rosie1978
    • By Rosie1978 20th Apr 17, 12:50 PM
    • 122 Posts
    • 313 Thanks
    Rosie1978
    • #5
    • 20th Apr 17, 12:50 PM
    • #5
    • 20th Apr 17, 12:50 PM
    When sold the advisor (now no longer practising) didnt explain to them (they say) that the interest would go up to 5% when the mortgage was paid off, turning into a'loan'.
    • zx81
    • By zx81 20th Apr 17, 12:51 PM
    • 12,475 Posts
    • 12,639 Thanks
    zx81
    • #6
    • 20th Apr 17, 12:51 PM
    • #6
    • 20th Apr 17, 12:51 PM
    Does their paperwork back up their story?
    • Rosie1978
    • By Rosie1978 20th Apr 17, 1:05 PM
    • 122 Posts
    • 313 Thanks
    Rosie1978
    • #7
    • 20th Apr 17, 1:05 PM
    • #7
    • 20th Apr 17, 1:05 PM
    OK I've done more digging - apologies I didn't mean to dripfeed. They pay £2000 a year (£167 a month as the bank asks) and the interest per year is £1700. It has a 9.5% interest rate.

    The origianl loan was 5% but as they paid off the mortgage associated with it (when house was sold following split), they weren't aware that if they didnt pay off the loan at the same time that the interest would rise a further 5%.

    Neither will be able to get the credit to get another loan to pay this off - they are stuck.
    • Rosie1978
    • By Rosie1978 20th Apr 17, 1:06 PM
    • 122 Posts
    • 313 Thanks
    Rosie1978
    • #8
    • 20th Apr 17, 1:06 PM
    • #8
    • 20th Apr 17, 1:06 PM
    And I guess no - this was ten years ago, he is no longer practising and it was all done verbally. Oh god.
    • zx81
    • By zx81 20th Apr 17, 1:16 PM
    • 12,475 Posts
    • 12,639 Thanks
    zx81
    • #9
    • 20th Apr 17, 1:16 PM
    • #9
    • 20th Apr 17, 1:16 PM
    They should at least look at overpaying. Even small amounts will save them a lot in the long run.
    • molerat
    • By molerat 20th Apr 17, 1:23 PM
    • 16,607 Posts
    • 10,826 Thanks
    molerat
    Two options
    Get another loan at a lower rate and higher payments.
    Pay more each month.

    When they signed up they probably only looked at £19,000 for only £167 a month, end of train of thought. Many fall into the trap.
    www.helpforheroes.org.uk/donations.html
    • Rosie1978
    • By Rosie1978 20th Apr 17, 1:31 PM
    • 122 Posts
    • 313 Thanks
    Rosie1978
    Thank you all. They wouldn't be able to raise the £9k each to get a loan to repay it and you are right - they fell into the age old trap. It seems impossible that this could be offered in this day and age anyway but they must be stuck. They insist the broker didn't tel them about the rise if they repaid the mortgage but he doesnt practice now, so what can be done.

    Breaks my heart. Thanks for your help, all.
    • Tarambor
    • By Tarambor 21st Apr 17, 5:01 PM
    • 877 Posts
    • 586 Thanks
    Tarambor
    It seems impossible that this could be offered in this day and age
    Originally posted by Rosie1978
    I don't think it can any longer. Lenders were lending very irresponsibly throughout the 2000s and Labour did nothing about it because it made the economy look good and gave people a happy feeling so they let it run. Hell my FIL got £120k of borrowing and he was 60 years old and had spent 2 decades living on disability benefits. You can guess how that turned out.

    Things have tightened up immeasurably and I doubt this kind of thing would be allowed or if it did happen there would be ramifications down the line like the PPI scandal.
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