Two choices - Lie or arrears? HALIFAX

Barney088

I'm a mortgage broker and need some help for a client of mine, I have never given her advice but as our kids go to school togeher she has asked me what to do.

Her husband has left her and left her to pay the mortgage, it is on a repayment basis and is quite high, she can afford £400 a month which equates to the interest only element. After calling the halifax she was left with two options, either tell them she has an investment product or pay the £400 a month and fall into arrears by £200 a month.

I've spoken to Halifax as this seems completly stupid, she won't lie and doesn't want to fall into arrears.

Are there any brokers, or customers, who have had similar experiences and know a way to resolve this crazy situation?

She is fully aware that she will have to sell the property when it comes to pay the mortgage off, infact she is lkelty to sell it when her kids are 16 (nine years away).

toonfish

start an ISA to repay it at £10 per month

AndrewSmith

I would be inclined to agree with the above.

Switch the loan to interest only immediately and tell her to start funding an ISA for the purpose of repaying the mortgage for £10 per month. No lies are being told and everything will be above board.

dwight-van-man

Unless the lender asks how much is being paid into the ISA and decides £10 per month isn't enough to repay the loan. Lenders are supposed to deal with requests like this in unusual situations sympathetically - might be worth letting them know her position and her intentions regards eventual repayment and see what happens...

AndrewSmith

dwight-van-man wrote:

Unless the lender asks how much is being paid into the ISA and decides £10 per month isn't enough to repay the loan. Lenders are supposed to deal with requests like this in unusual situations sympathetically - might be worth letting them know her position and her intentions regards eventual repayment and see what happens...

they wont ask and even if they do they are not qualified to give an opinion in whether the amount is sufficient as they do not know that you may make lump sum investments along the way as well.

dunstonh

As an ISA is a risk based investment vehicle, they have to be very careful if they try to get involved there as they are basically insisting on the person taking a risk. The very thing most endowment sales get upheld on with complaints today.

dwight-van-man

AndrewSmith wrote:

they wont ask and even if they do they are not qualified to give an opinion in whether the amount is sufficient as they do not know that you may make lump sum investments along the way as well.

Fair enough - I don't know how Halifax operate. My comment was based on the one lender I do have a working knowledge of who, rightly or wrongly, will ask how much is being paid into an ISA and will make a judgement on the suitability of this sum. As shes an existing client, I still think she should try requesting interest only on the basis of her change in circumstances first. Assuming she's up to date with payments and theres a reasonable LTV, they'd be pretty harsh to refuse.... or maybe I've just got my niave hat on today :A

nrsql

Don't think I've ever been asked for the amount (or how) just that I have made provision to pay off the mortgage.

She could say that she is starting off at £10 a month into an isa but will increase later when the climate is better.
Could also say she will pay off the mortgage by the sale of the property probably.

Don't see how they could have problems with that without giving investment advice.

regularsaver1

Bascially - if a request to change to interest only is made - they will always ask why and what investment vehicle is in place. They do have to put a note on file, but they will not go into depth

barney - is there are scope on the mortgage term to bring down the payments, but still on repayment?

rossbenn

Is it possible under the new earmarking law that she could be entitled to half her husbands pension. If that was the case, you could put it through as a pension mortgage where she would use the tax free lump sum on retirement to pay off the interest element or do a hybrid if the figures dont stack up.

Just a thought.

Barney088

Thanks all, I guess the answer is tough, Halifax are not prepared to change the case from repayment to Interest only but will allow her to fall into arrears and damn her to a life of adverse mortgages beyond that. I feel strongly that we are "mis-informing" the halifax that her ISA at £10 a month is the way she will clear the mortgage.

I've spoken with the Ombudsman and they believe that the banking code suggests that the Halifax should do more to help someone out in this situation, not offer the arears solution.

No, not really scope to move the term out to help, she needs a term of nearly 40 years to make the payment work, she's not keen on that as you can imagine.

I like the thought of the Pension, I'll ask her about that, perhaps Halifax will consent under that option.

Dwight_van_Man it seems we are both niave, I would have thought that Halifax would be more than happy to help the customer out their head of "Mortgage Operations" in Belfast has told me, on a taped call that there is no way they will consent to this and whilst it is not an ideal situation to allow a customer into arrears it is the only option, other than lie.