Mortgage offer documents, how binding???

mil

I have a problem with Woolwich aka Barclays over my mortgage. At the end of my fixed rate deal in April 08 i was offered a new product and took Woolwich up on the same, whilst incorporating my original loan and some arrears which i had. (for info original loan £210k, arrears 6k) .

Following rate switch signed offer documents and began paying interest only payments calculated on new loan amount of £216k. Now Woolwich have pursued me for 6k arrears and started possession proceedings!! My loan offer documents say that at the the end of the loan i will still owe £216k, as with interest only loans, but therefore why are they still chasing me for the arrears!!! Is the mortgage offer document i have binding?? To me it seems like im paying for the arrears in my monthly payment, but still being chased for it!! HELP!

maninthestreet

So you have an interest-only mortgage for £216K, and Woolwich are saying you are in arrears because you have been paying the interest-only i.e made no capital payments??

mil

Sorry, didnt explain it very well,

no they are saying i still owe the arrears from the original £210 loan, but I incorporated them into the new loan, to make it a loan of £216k and began paying the higher payments relative to the higher loan amount! If i now pay the arrears and get the capital sum down to £210k, as they are seeking, my loan documentation will still say i owe them £216k at the end of the loan in 22 years time!

beecher

Have you phoned them up to ask about it? Have you had any letters regarding the arrears since last April?

getmore4less

You need to get back to Barclays proto to find out why they are chasing for the £6k that should have been paid off by the extended loan.

Might be someone forgot to make the transfer to the right place when the old loan was redeamed.

mil

Yeah phoned them, they said as it wasnt a remortgage but just a rate switch its different!! But they sent me a formal rate switch offer document which i had to sign so, dont see how it is any different. Thats my main query really how binding is the mortgage offer document??? im sure its binding on me at the end of the mortgage, When they come looking for the £216k! So it should be binding on them, in which case i have a new loan which incorporates my arrears.

beecher

Did Barclays ever agree to you adding the arrears onto the amount outstanding or did you just assume that they had because they told you your balance was £216k?

The mortgage offer itself won't bind you to the amount you repay at the end, otherwise no-one on interest only mortgages would ever overpay.

dunstonh

Yeah phoned them, they said as it wasnt a remortgage but just a rate switch its different!!

The lender is correct then. A rate change doesnt suddenly change arrears into a new amount agreed. You still remain in arrears.

But they sent me a formal rate switch offer document which i had to sign so, dont see how it is any different.

They have to get your signature to agree a deal change. That is normal. They apply the rate change to your outstanding balance. So, it would include the arrears.

However, that doesnt mean that they have authorised the arrears to be converted into an increased loan with no arrears. I'm afraid you have made a couple of incorrect assumptions.

jamesd

What you should do is say you've obtained advice and now understand how you misunderstood the situation. Then make an offer to pay the arrears over a period of up to a few years. Provided you've made an offer of that sort and you turn up at the reposssession hearing they are unlikely to succeed in getting possession. Hopefully they will stop bothering to try on learning that there should be progress now.