Cannot repay interest only mortgage at end

Senior_Paper_Monitor

UKClare - you have taken the right decision (while I was typing the previous post).

I work for a broker where we 'take on' most challenges (and get a good success rate - even if we have to do a no fee/no commission solution) but this one really seems to be beyond redemption.

If someone 'in the family has funds/credit there may be a solution - but this does not seem to be the case.

I hope you now walk away, knowing you did more than could have been reasonably expected of you

sandsy

So did the lender not ask them at outset how they planned to pay off the loan at the end of the 5 years?
I have a partial I/O mortgage and it was definitely one of the questions asked.

RenovationMan

None of this makes sense. How can a couple be nearing retirement and have only bought their first house 5 years ago on interest only?

I'm sorry for being so suspicious, but there is something definitely fishy about all this.

Thrugelmir

RenovationMan wrote: »

None of this makes sense. How can a couple be nearing retirement and have only bought their first house 5 years ago on interest only?

I'm sorry for being so suspicious, but there is something definitely fishy about all this.

Why? You yourself know how easy it is to circumnavigate the rules.

We will be hearing a lot more of these stories in the years to come. With the number of self certified / interest only mortgages that were granted between 2004 and 2007. As people over extended themselves trying to catch the House Price Express.

RenovationMan

Thrugelmir wrote: »

Why? You yourself know how easy it is to circumnavigate the rules.

We will be hearing a lot more of these stories in the years to come. With the number of self certified / interest only mortgages that were granted between 2004 and 2007. As people over extended themselves trying to catch the House Price Express.

There are no 'rules' about having a repayment vehicle, there are merely guidlines.

While it makes perfect sense to me to get an interest only mortgage over the period of 25 years and use a combination of overpayments and inflation to reduce the debt, there is no way this could have happened over a 5 year period or that anyone could believe it could. I also find it difficult to believe that a couple could be just 5 years before retirement before they decide to finally buy their first house. I'm sorry but ther is just too much that doesnt make sense here and so unless I get more evidence to the contrary I'm going to have to file this under 'anti-IO trolling' and leave it there. :cool:

Thrugelmir

RenovationMan wrote: »

There are no 'rules' about having a repayment vehicle, there are merely guidlines.

That's the crux of the matter. Unfortunately not everybody is financially savvy.

Also with due respect to the mortgage brokers that post on this forum, the industry has had a fair number of cowboys in recent years. Regulation of brokers wouldn't go amiss.

Senior_Paper_Monitor

Mr Thrugelmir ....

"Regulation of brokers" !!!!!

You are joking of course ?

Brokers are regulated half to death (unlike the bank salesforce) - that doen't mean there aren't bad/evil/incompetant brokers, it just means that the regulatory structure isn't right.

getmore4less

IMO they need to get the place on the market,

OFFERS over £115k and hope for a quickish sale.

Ask the lender to extend the term till sold.

I would tell them this, then quietly remove myself from the discussions it will end in tears and you don't want to be part of it and attract blame

C_Mababejive

Welltheyve had cheap rent for a few years and now its time to pack,sell and go rent again.

magpiecottage

A mortgage arranged five years ago would have been regulated and they should have been warned of the consequences of taking an interest-only mortgage without a repayment vehicle at outset.

If they weren't, then they may be able to make a claim against whoever arranged it. You may think they ought to have known anyway (so would I) but if they want to go to FOS with an argument which would amount to "we were that stupid and the adviser should have known we were that stupid", it would probably be upheld.

(Those of you who are following the "Have your say on the Financial Ombudsman Service" thread will see why I think their is not a bias in favour of business when I say this.


If the mortgage is more than six years old, though, the firm will be able to timebar a complaint if it can also demonstrate that it is more than three years since they would have known they had cause for complaint. Since 2004, the FSA has required lenders to write to those on interest only mortgages every year to remind them of the need to have a plan in place to repay the mortgage and warn them of the consequences of not having one, so both requirements must be met.