Is your lender coming after your IO mortgage?

System

We were IO for 2 years and cleared 6k of capital in that time.

We're on a repayment now and paying less off the capital.

Lenders need to think this through.

Brodiebobs

Joeskeppi wrote: »

We were IO for 2 years and cleared 6k of capital in that time.

We're on a repayment now and paying less off the capital.

Lenders need to think this through.

in a way its in their interest (excuse pun) as the bank are making more money off your interest.

this chasing up of customers will only effect the ones who already aware of their situation such as myself.

Thrugelmir

Brodiebobs wrote: »

explained we were already making payments of more than repayment mortgage, and she didnt seem to grasp this... even said our circumstances would be investigated if we didnt switch to repayment!? seems they are trying to enforce it!!!

The fact that you are currently making overpayments is no guarantee that you will continue to do so. As interest rates rise the money that people are currently using to overpay will disappear in interest.

Lloyds as a responsible lender needs to ensure that borrowers will not end up in financial difficulty or have not repaid their mortgage at the end of the term. The latter is now the case for many elderly people who speculated on HPI to boost their retirement pots. But no longer have the incomes to repay the mortgage.

The reviews are going to be annual. With the borrower being required to give documentary proof that they have the savings in an ISA etc which are on track to discharge the debt.

Hopefully this will become an industry standard for all new mortgage lending.

Lloyds of course could load the interest charge for those not complying to reflect the increased risk. So would prove an effective incentive.

Brodiebobs

Thrugelmir wrote: »

The fact that you are currently making overpayments is no guarantee that you will continue to do so. As interest rates rise the money that people are currently using to overpay will disappear in interest.

I understand your point but we are on a fix for another 4 years hence the reason were overpaying.
Maybe lloyds should take their own advice, when we set up this mortgage in a branch we knew nothing about mortgages, took everything the 'advisor' said by the book and signed upto a 7 year I/O fix on his 'advice' luckily i came across this site and soon clued up!

Thrugelmir

Graham_Devon wrote: »

What will this acheive?

So Lloyds phone the borrower. Lloyds asks the borrower if they have kept to the terms of the agreement which no one cared about at the time. Borrower cr*ps it so says yes, of course. Lloyds say , oh good, have a nice day.

What can lloyds do about it? They couldn't force anything could they?

Lloyds reduce the size of their mortgage book. Remember HBOS is funded by the SLS and Lloyds is now paying tax on wholesale funding (June's budget).

Documentary evidence will be required to prove that the savings exist.

Charge the customer a risk premium.

Brodiebobs

"I can't believe people would do this, you were basically 'renting' with none of the benefits of renting. A mortgage is pretty much the biggest thing anyone will have to pay, yet so many just didn't have a clue and as I've said millions more probably still don't."

Like i said we knew nothing... stupid i now know, but the house we were doing up needed renovating, he advised we do this until work was done, then switch to repayment or sell, and that 'everyone' did it him included. This was a lloyds employee i hasten to add...

Luckily we did come to our senses and trying our best to cushion ourselves but dread to think how many other people he advised to do the same... as well as countless other branches/employees.

wymondham

Graham_Devon wrote: »

What will this acheive?

So Lloyds phone the borrower. Lloyds asks the borrower if they have kept to the terms of the agreement which no one cared about at the time. Borrower cr*ps it so says yes, of course. Lloyds say , oh good, have a nice day.

What can lloyds do about it? They couldn't force anything could they?

The fact the conversation took place will be noted (possibly recorded) and in the future when it transpires the borrower was telling porkies you can then back it up....

Thrugelmir

[QUOTE=Brodiebobs;35310795I understand your point but we are on a fix for another 4 years hence the reason were overpaying.
Maybe lloyds should take their own advice, when we set up this mortgage in a branch we knew nothing about mortgages, took everything the 'advisor' said by the book and signed upto a 7 year I/O fix on his 'advice' luckily i came across this site and soon clued up![/QUOTE]

Though you would have been made aware that repaying the capital was your responsibility. Many people in their rush to obtain a large as possible mortgage to buy the most expensive house they could. They wouldn't have been listening to what was either said or written into their offers or contracts.

By Lloyds contacting every customer now. There's no excuse. So times have changed.

Herbie_Hancock_I_wish

Ah for the days when blokes handing out mortgages wore pin stripe suits. Dingy brown offices in the town centre. Demanded a decent deposit and references from your employer. Then you waited until the funds were available from the savers. Off set, endowments, what were they. The only way cocker you can get a house is by repayment. Flipping heck! The sauce of it all.

Now Northern Rock had the right idea........

datostar

Herbie_Hancock_I_wish wrote: »

Ah for the days when blokes handing out mortgages wore pin stripe suits. Dingy brown offices in the town centre. Demanded a decent deposit and references from your employer. Then you waited until the funds were available from the savers. Off set, endowments, what were they. The only way cocker you can get a house is by repayment. Flipping heck! The sauce of it all.

Now Northern Rock had the right idea........

Yes, and the deposit had to be saved with them, regularly added to or else. Sounds like a Building Society. It all started to go wrong when banks elbowed themselves into the mix, then building societies thought they could be banks as well. Ugh.