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

the_flying_pig

did the other housing bubble countries have an IO explosion, like the US, Ireland, Spain, Australia, etc?

Thrugelmir

jamesd wrote: »

It'd be interesting to see whether an attempt at a repossession in such cases could succeed, given all payments made on time and the credible repayment plan in place.

Irrelevant. There's a contractual arrangement in place with a definative end date in place. That's what matters.

Nowhere in the contract is there an option to extend, defer or amend the terms by the borrower.

So legally the bank wins, heads down. The borrower has had 25 years to consider repayment of the debt.

michaels

Please explain to the hard of thinking like me how IO is financially worse than renting?

RUN_RABBIT_RUN

michaels wrote: »

Please explain to the hard of thinking like me how IO is financially worse than renting?

you have to pay for all your own buildings and fixtures maintenance for one thing. the landlord pays for all that if you rent

plus there's all the initial expense of buying the house in the first place

jamesd

jamesd wrote: »

Yes, it's a repayment method, one blessed and described as such by the FSA:

"Examples of possible repayment strategies include: ...
• on death, for example in the case of a lifetime mortgage; or
• sale of the mortgaged property, where this is a credible strategy because of down-sizing or repayment at death."

I've left in the line after the one you stopped quoting at.

Graham_Devon wrote: »

It's not a lifetime mortgage.

It doesn't need to be. You simply stopped quoting one line early. Though both lines are merely examples, not an exhaustive list of case where it's an acceptable repayment method.

jamesd

Thrugelmir wrote: »

Irrelevant. There's a contractual arrangement in place with a definative end date in place. That's what matters.

We don't know that the term has ended. Nor the initial term, which could have been until death. Even where the term ends, that just means that the lender has to make a successful repossession application if they want to force sale of the property.

I haven't seen any court decisions on what happens in such cases. Maybe lenders avoid them, which seems sensible.

We do know that lenders are trying to get people to switch to repayment basis even where there is a repayment method in place, if they don't like the repayment method. Maybe her life expectancy looked long enough that she might live beyond the end of the mortgage term so they might not get repaid on time.

We don't know enough about the facts to know, unfortunately.

jamesd

michaels wrote: »

Please explain to the hard of thinking like me how IO is financially worse than renting?

The FSA doesn't regulate renting, so it may seem fine to the FSA for them not to consider the whole picture.

roddydogs

Theyll only be offered in the future to people "Proving they are saving" how on earth do you do that "Prove youll save for 25 years, and how would it be policed?"

Thrugelmir

jamesd wrote: »

We don't know that the term has ended. Nor the initial term, which could have been until death. Even where the term ends, that just means that the lender has to make a successful repossession application if they want to force sale of the property.

I haven't seen any court decisions on what happens in such cases. Maybe lenders avoid them, which seems sensible.

We do know that lenders are trying to get people to switch to repayment basis even where there is a repayment method in place, if they don't like the repayment method. Maybe her life expectancy looked long enough that she might live beyond the end of the mortgage term so they might not get repaid on time.

We don't know enough about the facts to know, unfortunately.

Mortgage contracts are in essence very standard documents. They comply fully with English contract law, and meet the approval of regulatory authorities.

To amend the contract both parties have to be in agreement. If not the termination clauses in the contract become effective.
There's no if's, but's or maybe's.

magpiecottage

abaxas wrote: »

Any mortgage is subject to a 'change in circumstance' clause. If the borrower fails to pass on any changes in her income etc, the bank can ask for the money back or increase IRs etc.

Oh no they can't. They can do so if there is a change to the structure and/or use of the property as that will affect its validity of it as security.

However, they are not automatically entitled to details of income.The only reason they might need to know is if the borrower applied to increase their loan or ran into financial difficulties.

A complaint that an interest rate had been increased or a loan foreclosed solely because a borrower's income had fallen would, if true, be an easy uphold at FOS - probably with an additional award for distress and inconvenience.


With this case, we do not know all the facts, though.

My own view is that Santander would find it difficult to persuade a court to allow it to take possession if the interest payments continue to be made in full and on time but that is not the same as saying it is impossible.

However, I wonder if putting the property into the daughter's name whilst continuing to live there is the best option.

If the borrower still lives in the property it will count as part of her estate for Inheritance Tax purposes and the equity is currently enough to take her into the realms of Inheritance Tax (at 40%).

If she took a lifetime mortgage for the £140K she would not need to pay any interest - it would be added to the loan, reducing the equity.

It would also release £500 per month which she could spend herself or give some or all of it to her daughter. Regular gifts out of income which do not affect the donor's standard of living are free of Inheritance Tax and in this instance the entire £500 would not affect her standard of living since it is currently being paid to Sandtander.

Of course the inheritance would eventually be smaller but I do wonder if this might be a better option regardless of Santander's stance.