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

RenovationMan

chewmylegoff wrote: »

she's got £360,000 of equity according to your post. i'm sure she can find something.

also, the fact that santander are making what you say is an illogical decision in order to minimise the risk of being opportunitistically sued by customers, that's an indictment on the general public / state of the nation as a whole, really, isn't it, rather than the oversight system.

i think you are rather overselling this - her only legal option is not to sell and move away from the area. she could downside and remain in the area, move into rented, or borrow the money from her daughter (which is in substance what you're setting up by the sounds of it). hell she could even sell it to an equity release pirate if she wanted to, since her desire seems to be just to stay there until death.

basically the complaint is that she isn't allowed to continue to pay an IO mortgage with no intention of repaying the capital. it's not really that outlandish that a bank might not really want to make perpetual loans to people who are 69 years old.

Serious question. What is your fundamental issue with people remaining on IO forever?

Neverland

Emy1501 wrote: »

It seems highly likely therefore that the mortgage was taken out on the basis that a repayment tool was in place to pay off the mortgage at term and no evidence has been made to actually do this.

I suspect its a lot more likely that there was a repayment plan to repay the IO mortgage but:

- it hasn't produced enough growth (endowment or PEP based repayment vehicle)

- the woman stopped or didn't increase her contributions enough to make up the shortfall

- the hoped for windfall didn't materialise (e.g. from ex-husband's parents as an inheritance)

Like someone said above I can see this being repeated up and down the land...

Neverland

RenovationMan wrote: »

Serious question. What is your fundamental issue with people remaining on IO forever?

Since we (the tax payers) own RBS and Lloyds and guarantee/ subsidise every other retail bank in the country I object to my taxes being used to keep someone else in a house they can't afford :mad:

Neverland

chewmylegoff wrote: »

the bank could just jack up the rate a bit - but it clearly wants its principal back instead.

Of course they do, she's got a rubbish record of loan repayment hasn't she...:o

RenovationMan

Neverland wrote: »

Since we (the tax payers) own RBS and Lloyds and guarantee/ subsidise every other retail bank in the country I object to my taxes being used to keep someone else in a house they can't afford :mad:

You have my apologies, I skimmed the thread and so must have missed some information as I didn't realise that the home owner had a mortgage with RBS/Lloyds or that the tax payer were keeping this lady in her house.

Is the mortgage being paid by SMI or something?

shortchanged_2

RenovationMan wrote: »

You have my apologies, I skimmed the thread and so must have missed some information as I didn't realise that the home owner had a mortgage with RBS/Lloyds or that the tax payer were keeping this lady in her house.

Is the mortgage being paid by SMI or something?

To be honest I think this is irrelevant. When people take out IO mortgages they are clearly pointed out that the capital is to be paid off at the end of the mortgage term. What is so difficult to understand about that?

If her mortgage term is up then she needs to find the balance of the capital somehow. Simple.

silvercar

abaxas wrote: »

Incorrect,

All mortgages come with the 'change in circumstances' clause. You decide if you wish to keep to the contract or not.

Basically it's a coverall for the lender, meaning you are almost always in breach of contract. Exactly what they want you to be, so they can (if they wish) do whatever they like.

Welcome to the world of contracts, maybe if you read them before you sign, you may understand what you need to do.

I've read my contract thank you. No mention of having to inform the lender of a change of circumstances, only a request that you discuss with the lender if you are having difficulty making payments.

So your first para was factually incorrect.

chewmylegoff

RenovationMan wrote: »

Serious question. What is your fundamental issue with people remaining on IO forever?

i don't have a fundamental problem with it. on one level it makes sense to lend to her as low risk of default given amount of equity in the property, and they are getting 4.2% interest until she karks it, when they get their principle back. unless they think they can relend at a higher rate than 4.2% (bearing in mind if they lend to a FTB at 95%LTV they may have to keep more capital on their balance sheet than with a 30%LTV loan (although the fact it is interest only may skew, not sure) this isn't just a straight comparison of which interest rate is higher).

conrad thinks one reason they won't extend the arrangement is that they don't want the risk that they will later receive a complaint that they missold an interest only mortgage to her.

also to take into consideration is that if she does stop paying and they need to repossess then there may be some difficulty with doing that- e.g. if she goes into care home and income is diverted to pay fees there so can't pay mortgage. what happens then? will the court allow repossession to take place. will the bank have to wait until she dies to get interest and capital out of proceeds of sale. blah blah blah.

may also be something around risk-weighted assets here - not sure what they'd have to do with this loan on their balance sheet.

in any event, it's santander's problem with her remaining on an IO mortgage that she needs to worry about, not mine.

abaxas

silvercar wrote: »

I've read my contract thank you. No mention of having to inform the lender of a change of circumstances, only a request that you discuss with the lender if you are having difficulty making payments.

So your first para was factually incorrect.

I'd get reading again, you obviously missed a bit.

Also all loans will have this. Get reading the small print.

Going4TheDream

shortchanged wrote: »

To be honest I think this is irrelevant. When people take out IO mortgages they are clearly pointed out that the capital is to be paid off at the end of the mortgage term. What is so difficult to understand about that?

If her mortgage term is up then she needs to find the balance of the capital somehow. Simple.

I think that is how I feel about it - quite clear cut for me