Mortgage is not a mortgage its a business loan!!!

violetblush

Hi,
I need some advice on a predicament I am facing with my bank = HSBC

Five years ago I left my husband due some horrific domestic violence. I had my own company at the time and was fortunate to be able to get a loan from HSBC to buy another property for my son and I to move into. It was a business loan as I could not apparently have another residential mortgage but it wasnt a buy to let either. It was 2.5% above base and was supposed to be repaid when we sold the marital home and I got my share.

It took me five years to get an order for sale against my husband and force the house to be sold. The mental torture of the divorce meant i lost it for a while and lost the business. The bank were lovely and let the loan continue even when I missed a few payments.

Then I got a new bank manager. He put the interest up to 5,5% above base and started sending any variation letters to the marital home. the first I knew about them was when my husband presented them in court. He also said I had to set up a business account for the loan repayment to come out of. This meant as I didnt know that the interest rate had doubled i was still only paying half of my repayments as the post was going to the old house. I ended up with 5K of arrears. This it seems was unauthorised overdraft interest as they took the repayments even though there wasnt enough in there. I had to then clear this to stop them from taking the house.

Now the marital home has been sold. With the drop in prices I didnt come out with anything to close to what had been envisaged. HSBC are now saying that they have to convert this to the a repayment loan rather than just interest only. This puts monthly payments up to £900 which I cant afford but no paperwork yet has arrived to say they have done this. The original deal was that they would convert it to a proper mortgage when the house was sold but the new manager is now refusing to do this.

I am very worried I am about to lose our home. I am well now and working but due to the last 5 years my credit history is shot so getting a mortgage is not going to happen. I hoped they would honour what it says in the letters and give me a mortgage but I cannot talk to this guy, he is hard core old school bank manager material who seems to thoroughly enjoy being horrible. He is also divorced and his wife took him to the cleaners which he has made perfectly clear!

Can I challenge any of this? Can I get back any of the interest I have paid. I have asked for a copy of the file under the data protection act, over 2 months ago but still havent received it or a letter to say i have to pick it up from somewhere.

Xmas is coming and I get the feeling he will happily deliver something nasty for Xmas eve.

Please Please help!

I have asked for a

beecher2

Maybe someone else can make more sense of this, but I don't see how you can get back any of the interest you've paid. I also can't see how this is down to your new bank manager being vindictive. Contact the telephone helpline if you're not happy with what your branch manager is saying.

Is selling up and renting an option for you? Any bank will use present day lending criteria to decide whether to lend you money.

silvercar

It may be worth talking to a mortgage broker to see if a mortgage is possible. Failing that is the business doing well enough to support a business loan?

If you are not happy with the way you have been treated then gather your evidence, calculate the amount of interest you feel you have been overcharged and make an internal complaint to the bank. If you are not happy with the outcome you can then take your complaint to the ombudsman.

Are HSBC now requiring you to take a repayment mortgage or repayment business loan? Recent guidelines from the FSA do suggest that mortgages should have repayment vehicles, so even if it is not a repayment mortgage you need to show how the loan will be repaid. One option on a repayment mortgage is to lengthen the term as this reduces the monthly repayments - though it does increase the total amount of interest you pay in the long run.

dunstonh

I cannot talk to this guy, he is hard core old school bank manager material who seems to thoroughly enjoy being horrible.

Its unlikely to be personal. Its probable that your banking has been moved to a harder line because of your past conduct. The banks have different management levels for dealing with different types of account. There are typically managers that deal with the higher risk debts and they do tend to be harder. Mainly as they have to be as you dont want a soft touch in that role. Your history of problems and with it being interest only would put you in to a higher risk category.

The original deal was that they would convert it to a proper mortgage when the house was sold but the new manager is now refusing to do this.

The world is different today to how it was a few years ago (or even 6 months to a year). Lending criteria is tightening up. However, even if they convert your business loan to residential mortgage on capital & repayment mortgage terms, its unlikely that it will still be affordable to you. Whether its business or residential isnt going to be make the biggest difference. Going from interest only to repayment basis is going to do that.

I am very worried I am about to lose our home.

That is inevitable sooner or later. You are on interest only. So, either you lose it when the business loan ends or you lose it earlier because you cannot afford the repayments on a capital & repayment basis. It may be the harsh reality is that you cannot afford to own your own property at this time and that maybe selling it and starting fresh may be the clean option. even if it means going rented for a while.

. This it seems was unauthorised overdraft interest as they took the repayments even though there wasnt enough in there. I had to then clear this to stop them from taking the house.

When its a payment to themselves from your account then they often let the secured debt payments go through as they are out of pocket one way or the other but from your point of view, its better that secured debts are paid. Either way you were going to suffer increased interest as you didnt have the money and were borrowing more.

You may wish to pop over to the debt free wannabee section as they have some very good people in there who can help out those who have debt problems like yourself.

silvercar

If you have been overcharged on interest rates and by them transferring money to an unauthorised overdraft rather than an agreed business loan rate, then you should be able to get the extra interest refunded. This will mean that the outstanding amount would be far lower than it currently appears. That in turn could make the payments affordable - even on a repayment (capital and interest) basis.

Whether you have been overcharged will depend on your paperwork. You need to dig it all out and go through it.

Conrad

violetblush wrote: »

Hi,

I hoped they would honour what it says in the letters and give me a mortgage

I'm afraid to advise you that they cannot convert it to a residential mortgage as it would break every rule in the book, namely;

+ They would not be able to grant a resi mortgage as you cannot demonstrate over a sufficient period that the mortgage would be affordable
+ It is unlikely your income now is enough to justify the mortgage (about 3 x income is normal where someone has a low credit rating)


My own business premises were remortgaged with an HSBC business loan and even though I never went into overdraft and always had a lot of savings with HSBC, they still made me go to a capital repayment basis when the credit crunch first began in 2007.

The terms of thier business loans enable them to make such changes and indeed the Government regulator exert pressure on Banks to get thier ratios of outstanding loans to captial more healthy and one way of doing this is forcing clients to repay capital.

I don't know your'e exact situation but from what I've read you kight want to look into Bankcruptcy as a final solution.
Don't bother with an IVA or other managed debt p[lan - all they do is exstend the agony - and having a DM plan will still mean your credit rating is just as bad as if you were bankcrupt, but over a MUCH longer period.

Good luck - not nice for you at all at xmas, but you need to take control and start over I suspect.
My own Brother did this - awful at the time, but since the day nhe went bankcrupt he never looked back. He was able to rebuild his life again from a clean slate.

jamesd

You need to start with their formal appeals process. At a minimum they seem to have badly breached both the data protection act and their duty of care obligations by sending your personal correspondence to the wrong address.

A long term loan won't currently be much different in interest rate from a mortgage, if you can get 15+ years term. 5.5% above base may be a lower rate than a mortgage you'd qualify for. You should discuss your situation with a mortgage broker if you've had a year or two with relatively OK credit because some non-prime lenders are returning to the market.

jamesd

It's a loan. What guarantees are there protecting it? Could you use an IVA or bankruptcy? The availability of those options is one potential big advantage of a secured loan like a mortgage.

Negotiating around these differences may eventually be a useful tactic, since loss of capital to default in the form of IVA or bankruptcy is less desirable than you continuing to pay.

silvercar

Is this business loan secured on your current home? If so, it would be excluded from bankruptcy.