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

Itismehonest

In which case then, yes, she should have been prepared for this to happen.

I understood "it's about FSA rules causing lenders to ensure a mortgage is cleared by a given age, whereas in the past common sense mean't the vast majority of folk carried on un - hindered, not forced to sell up." to mean that between "my" time in the 70s-80s & now the rules had been relaxed but had recently been re-tightened ..... in which case the goal-posts would have moved for anyone taking on a mortgage pre-tightening of the rules .

jamesd

This seems like a failure to treat the customer fairly and not something that is required by FSA rules. Indeed, it specifically contradicts parts of the FSA Mortgage Market review paper CP11/31:

4.46 We recognise that consumers can benefit from a wide variety of repayment strategies, which may vary greatly according to the particular needs and circumstances of the consumer. So we are not proposing a prescriptive approach to repayment strategies. We agree that a preferable approach is to allow lenders to consider repayment strategies according to the individual circumstances of each consumer, within a framework of appropriate controls. Examples of possible repayment strategies include:
• regular savings into an investment product;
• sale of other assets, such as property or other land owned;
• periodic repayment of capital from irregular sources of income (such as bonuses or some sources of self-employed income);
• 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.

zappahey

Conrad wrote: »

Aged 69
Santander have told her they want the £140k mortgage settled.

Is this premature settlement or the end of the agreed mortagage term? If the latter then it's within Santander's gift to offer whatever follow on arrangement they wish, or none at all.

Graham_Devon

There seems to be a bit of confusion here.

Conrad, are Santander saying to this lady they want the balance paid off BEFORE the end of her I/O mortgage contract?

I.e. is she say 17 years into a 25 year mortgage?

Or, are they saying they want it paid off at the end of the term?

Or, as I have read before, are they wanting to check her repayment ability? I.e. offer to put her onto a repayment mortgage?

There was quite a bit in the press about I/O clients potentially being told they had to switch to a repayment mortgage (or show a repayment plan).

I find your claim that if she was on a repayment mortgage it would make no difference vague at best. If she was on repayment, the bank would know it's being paid and when it will be fully paid off, therefore there would be no issue.

At the end of the day, you state she took I/O because she couldn't afford to pay the monthly payments for a repayment. Yes, it's difficult, and you can add a lot of emotion when they are approaching 70. However, she agreed to have a repayment vehicle in place. She doesn't. It's as much her fault as anyone elses.

There will be a lot of people caught out by this. BUT, everyone should have known about it. We can't hope for the lax rules of yesterday which allowed these situations to carry on allowing these situations. Everyone took part, from mortgage advisors, to those taking the mortgage.

jamesd

She does have a repayment method that is appropriate for her circumstances in place: sale of a property valued at £500k to settle a mortgage of £140k at the time of her death. It's even one that the FSA accepts as appropriate.

Emy1501

jamesd wrote: »

She does have a repayment method that is appropriate for her circumstances in place: sale of a property valued at £500k to settle a mortgage of £140k at the time of her death. It's even one that the FSA accepts as appropriate.

If she is still within the terms of the mortgage then its reasonable. If the mortgage term has finished then I suspect she will need to downsize or pay up.

GDB2222

jamesd wrote: »

She does have a repayment method that is appropriate for her circumstances in place: sale of a property valued at £500k to settle a mortgage of £140k at the time of her death. It's even one that the FSA accepts as appropriate.

I assume that the original mortgage with Santander has now come to an end, and it is hardly unreasonable for Santander to ask for their money back.

It is then up to Conrad, as broker in this case, to find a lender prepared to provide a mortgage of £140,000 based solely on this lady's pension income. Apparently, Conrad has failed to find a single lender prepared to take this case on.

Consequently, I fail to see why Santander is being singled out for blame in this case. The blame may fall on all the other companies, who collectively are refusing to take this case on, or the blame may fall on Conrad, who simply has not worked hard enough to find the deals which are out there. If the FSA rules are being misinterpreted, then apparently they are being misinterpreted by all the companies, not just Santander.

Perhaps the issue is not the age of this lady but the fact that her income is insufficient in the long term to service the mortgage, particularly perhaps if interest rates rise.

Neverland

Conrad wrote: »

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.

I don't agree with this

She had the option to sell a house she couldn't afford to pay for and buy a cheaper one she could afford the mortgage on

That flapping sound you hear is the sound of chickens coming home to roost...

She chose to put her head in the sand and hope that something would come up...or that someone else would bail her out..

..in this case it seems to be her daughter

abaxas

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.

If she has failed to pass on any details she may be in breach of contract and hence they can (if they wish) ask for the money back.

She signed the contract, she agreed to the terms, the terms are not unfair, she needs to keep to her side of the deal.

Graham_Devon

jamesd wrote: »

She does have a repayment method that is appropriate for her circumstances in place: sale of a property valued at £500k to settle a mortgage of £140k at the time of her death. It's even one that the FSA accepts as appropriate.

That's not a repayment method though.

The contract would have been such that the outstanding sum is payable after 25 years (or length of th emortgage).

Repaying on death, which could be another 40 years, based on todays house value only (which for all we know, in 40 years could be worth 90% less...not likely, but a possibility) is, in my view, asking too much.

Certainly I find it hard to agree she's being treated unfairly because they won't allow her to repay on this wooly basis. Meanwhile anything could happen to the house. Based on her (or more likely conrads) thoughts here, she might find it unfair to pay insurance, or forget....anything could happen, and it's not right to expect Santander to keep hanging around for her to die.

At the end of the day, the case is simple. She's in a house which she cannot afford, and based on what Conrad has stated, couldn't afford when she entered the agreement either, hence choosing to delay though interest only.