People in thier 60's being forced to sell homes.

Conrad

Another unforseen consequence of FSA regulation.

I'm getting ever more enquires from older people where thier lenders are contacting them and telling them to settle the mortgage or sell up due to thier age. This is a new phenonomen (sp!!!).

Hitherto these perfectly capable adults made thier own decisions, and in the main all was well, but not now, nanny knows best.

Today's example is typical;


Aged 69
Santander have told her they want the £140k mortgage settled.
Santander are merely following FSA 'treating customers fairly' rules.
Value £500k.
Payment int only £501 pm.

She is perfectly able to continued on, just as people always did, until death at which time debt could easily be settled.

She enjoys her income and has no desire to pay down capital, afterall she could die tomorrow.

Her only LEGAL option is to sell up, but she enjoys the close neighbourly community and Daughter lives close by, so it's not what she wants.

In this case and some others there is a solution - I'm putting into Daughters name, but this option is not available to many so they are forced to downsize OR WORSE STILL, IF THEY HAVE INSUFFICIENT EQUITY, FORCED INTO RENTED.

Yet another case of a blind state interfering in peoples lives unecessarily. I bet this sort of thing is never discussed by well off middle class FSA staff in thier conferences.

[Deleted User]

So your client took out a mortgage with no plans to actually settle it? I thought everyone knew that at the end of the term of an interest-only mortgage you had to pay the bank back the remaining amount.

kabayiri

I suspect just as many if not more have to sell off to pay IHT if their partner passes away, or to pay for elderly care home costs.

I'm afraid it's life Conrad. Rules will always affect some people adversely.

dunstonh

The FSA ought to make what it deems high risk transactions available to be bought via advisers with higher qualifications rather than say no to everyone.

That way you remove the mainstream "sales" route which stops any "sales" abuse that could occur but still allow the product to be available through higher qualified advisers with a better audit trail and disclosure of advice given.

DVardysShadow

Conrad wrote: »

.... Yet another case of a blind state interfering in peoples lives unecessarily. I bet this sort of thing is never discussed my well off middle class FSA staff in thier conferences.

The other interpretation is a blind, incompetent [or possibly malign] private enterprise misinterpreting the FSA 'treating the customer fairly' rules.

For me the jury is out on this until someone writes to the FSA and says 'Santander are doing this in your name, but is this really your intention?'

Conrad

ringo_24601 wrote: »

So your client took out a mortgage with no plans to actually settle it? I thought everyone knew that at the end of the term of an interest-only mortgage you had to pay the bank back the remaining amount.

She arranged it many years ago with her lender and like many didn't think much about it because in the past there was a general unspoken rule that lenders allowed mortgages to continue on in retirment.

If she's making the payments, and has done for years, and her pensions are index linked, what's the problem? To be clear, this is due to the FSA's 'Treating Customers Failry' rules, which all too often do the exact opposite.

WHAT IS FAIR ABOUT THROWING PEOPLE INTO THE ARMS OF LANDLORDS?

INTEREST ONLY - following her divorce 14 years ago she had no option but to take I/O as this was the only affordable solution. Again where's the issue, she can afford the payments and on death the capital balance will be cleared.

chewmylegoff

sounds like she can't afford to pay down the capital to me.

otherwise why wouldn't she just pay down capital? it's not like in the current environment she can be earning a guaranteed return of more than 4.2% (net) on £140,000 invested elsewhere in any traditional product.

anyway, hardly one to moan about, no doubt she told her mortgage provided when she procured an IO mortgage that she would be funding a repayment vehicle. and then didn't actually fund said repayment vehicle. and now it's all "not fair".

Conrad

DVardysShadow wrote: »

The other interpretation is a blind, incompetent [or possibly malign] private enterprise misinterpreting the FSA 'treating the customer fairly' rules.

For me the jury is out on this until someone writes to the FSA and says 'Santander are doing this in your name, but is this really your intention?'

That's a good point, and I suspect the FSA would give a mealey mouthed political response along the lines it's up to lenders to interpret TCF.

This misses the nub though, which is that if later a client such as this decided they'd somehow been missold / inappropriately advised (there's always people that will use this to thier advantage), Santander would quite likely be found wanting, so rather than take a common sense view to allow this lady to carry on, they use a blanket coverall to remove as much potential litigation as poss.

Lenders are not in the business of taking risks where the FSA is concerned, so common sense takes a back seat.

toby3000

Conrad wrote: »

In this case and some others there is a solution - I'm putting into Daughters name, but this option is not available to many so they are forced to downsize OR WORSE STILL, IF THEY HAVE INSUFFICIENT EQUITY, FORCED INTO RENTED.

If you're not paying off the mortgage than surely all you're doing is renting from the bank anyway?

I'm not going to shed any tears over people who are "forced to downsize" - if you can't afford to pay for or run a house then you should move.

Conrad

chewmylegoff wrote: »

sounds like she can't afford to pay down the capital to me.

Spot on.

But in the past this was largely a non issue. She would have carried on until death paying I/O and the substantial equity would have repaid the principal.

Why does it matter to anyone else, as long as she's making the interest due and happily living a perfectly ordered life?

Conrad

toby3000 wrote: »

If you're not paying off the mortgage than surely all you're doing is renting from the bank anyway?

So what?

She has an ordered life, the Bank is being paid, she has sufficient pension income to live on.

What possible harm is she doing?

You may not agree with her lifestyle, but surely that's not justification to condone people being forced out of home.

REMEMBER, SOME HAVE INSUFFICIENT EQUITY TO DOWNSIZE AND BUY AGAIN, ESPECIALLY THOSE WHO HAVE BEEN DIVORCED AND LOST MUCH ALREADY.