Jumping through hoops to go interest only

albo2002

I had a GMAC mortgage, which I originally reduced from 30 years to 19, that was sold to Webb Resolutions last year.

Because my flat is in a block that requires about £35,000-worth of work, per flat, to it within the next 12 months, I need to save money and fast.

So I today called up Webb Resolutions asking to change my term from 19 years to interest only.

But Webb Resolutions have replied saying that I have to send in a letter detailing precisely why I want to change my details (and they want a cheque for £75 even though GMAC only charged me £50 for this). They want financial facts that they will then 'consider', before getting back to me, at which point they will only give me a 'no' or a 'maybe'. If I'm lucky enough to get a 'maybe' they will then demand proof of earnings etc.

Has anyone else got experience of this? Does anyone have advice what I should say in the letter? Will the fact that I need to save money be enough?

mr_mortgage

It's unlikely that the fact that you want to save money will be enough.

They will want to see what repayment vehicle you have in place to cover the shortfall.

Not exactly ethical, but you could set up a cash ISA which you can have documents saying you have opened and say you plan to save the difference between the monthly repayment amount and the I/O amount plus some extra ... that would show you have a repayment plan in place.

Whether you continue to actually pay into that repayment vehicle is your decision ... you'd be lying to the bank if you didn't, but perhaps that might not stop you!!

Either way, you will need to show something that shows how you intend to repay the debt.

albo2002

mr_mortgage wrote: »

Not exactly ethical, but you could set up a cash ISA which you can have documents saying you have opened and say you plan to save the difference between the monthly repayment amount and the I/O amount plus some extra ... that would show you have a repayment plan in place.

thanks, but given that i need to save for the essential work done to the flat (and I could lose my home if I don't pay for this) won't they think (quite rightly) that any money going into an ISA will be used for the work in a year's time?

Would it be better to ask for a repayment holiday?

mr_mortgage

albo2002 wrote: »

thanks, but given that i need to save for the essential work done to the flat (and I could lose my home if I don't pay for this) won't they think (quite rightly) that any money going into an ISA will be used for the work in a year's time?

Would it be better to ask for a repayment holiday?

Are you OK with using the money not to pay off your debt, and to pay for works? If so, do they know you need the works done?

You will simply need to convince them that you want to switch to I/O and have the means to repay the loan. Usually this means showing that you have a suitable repayment vehicle in place. They cannot police that you use this vehicle as you said you would, merely that it was in place.

Conrad

They might query why you would want to switch to an ISA if there is no financial gain in so doing.

As such it may be better to come clean and simply say you need to reduce outgoings.
The FSA impose strict rules on lenders that they should assist clients with such needs in a considerate manner. If you get a decline I would tell them you will take it up with the FOS (FSA ombudsman)

albo2002

Conrad wrote: »

They might query why you would want to switch to an ISA if there is no financial gain in so doing.

As such it may be better to come clean and simply say you need to reduce outgoings.
The FSA impose strict rules on lenders that they should assist clients with such needs in a considerate manner. If you get a decline I would tell them you will take it up with the FOS (FSA ombudsman)

cheers mate - I will be honest with them. Fingers crossed! Although it should be stated that Webb Resolutions are not FSA-regulated. Apparently they handle the account for Crown Mortgage Management, who are FSA regulated - a very odd set up, but it makes me wonder if a threat of the FSA will mean much.

albo2002

on a separate note, when I reduced the GMAC mortgage from 30 years to 19, it cost me £50.

When Webb Resolutions took the mortgage over, they said they would honour exactly the same terms and conditions.

So how can they charge me £75 for going back from 19 years to interest only?