Halifax Interest Only mortgage letters

Simon_gloster

Railman wrote: »

Fortunately I'm in a position to be able to pay a repayment basis, and anyway the money will come back to me when the mortgage is closed in a years time. I wonder what will happen to people who are not in a position to pay a repayment basis, presumably they would fall into arrears?

For my part I intend to follow the suggestion of writing to them detailing out my repayment plan, together with its current progress (its 160% ahead of schedule). Then if they write back saying its unacceptable, I'll concede and let them move me to a repayment basis.

Should the FSA make a future rulling about these forced moves off interest only mortgages for customers with a faultless payment history. Then I shall join the queue for compensation at that time. I will by then have a full paper trail showing their reasoning.[/QUOTE

Quite honestly Railman, that is one of the best posts I have read in a long time, and worthy of praise.

I'd have your babies should I be able to give birth. Genuinely all the best for your mortgage free days from next year and spend spend spend on.......whatever tickles your fancy. You have your head screwed on and although your not overly impressed with their criteria, you accept and move forward. Cheers.

opinions4u

Should the FSA make a future rulling about these forced moves off interest only mortgages for customers with a faultless payment history. Then I shall join the queue for compensation at that time

Why do you think Halifax are reviewing their interest only mortgages?

Answer: Because the FSA told them to.

jamesd

Reviewing is good to do something about those without genuine repayment strategies in place. Halifax handling of this case so far doesn't seem so good though, it's not one where there's a lack of credible strategy.

kevinm75

Hi, I hope its ok to join this discussion. I have a similar problem but not quite the same. I am on an interest only mortage. We got it on self cert a few years ago and I have no repayment plan in place whatsoever ( yes I am fully aware this was a stupid idea but its done now) we are with the Bank Of Scotland. I had a letter a few months ago just advising to check our repayment plan was on course or to consider changing to a repayment plan. I am not against the idea of changing to a repayment plan BUT I know there is no way on earth I would be accepted for a new mortage so what I am basically asking is if we are changed to repayment do they just say your new payments are X per month or do you effectively have to apply for a new mortage? If you do have to apply what happens if you are rejected?
Thanks in advance and sorry if I've posted this in the wrong place

jamesd

A repayment plan doesn't mean a repayment mortgage. It means some reliable plan for how you will pay off the mortgage by the end of the term. Planning to use the 25% tax free lump sum from a pension from age 55 or using investments within a stocks and shares ISA are two commonly acceptable repayment strategies. Or you could switch to a repayment mortgage, perhaps changing the end date to make it more affordable.

Lenders can accept different things so it might be useful for you to ask as a potential new customer what repayment strategies are acceptable to BoS.

Your situation is one that the checks are supposed to catch, so that there's a chance to do something before the end of the mortgage.

kevinm75

Thanks for the reply. I meant repayment mortgage not plan. Sorry if I didn't explain clearly what I am worried about: Can we change to a repayment mortgage with no problem or can they refuse us a mortgage?

Jimbo1976

You can change to a repayment mortgage. Its not like applying for a new mortgage where you are underwritten based on income etc

Am sure BoS will be very pleased.

kevinm75

Thanks for that jimbo! One last thing if I wanted it extended, over a longer term, is that the same?

jamesd

They could refuse to allow the change to repayment but it wouldn't be in their interests to do so. If you have no repayment method in place now they are less likely to be happy to increase the term. First see how the calculation comes out using the method below. If that's affordable you're fine. If not you can consider changing term but then they probably will insist on a repayment mortgage and you'll lose the flexibility you have now.

What I suggest you do instead is work out how much the monthly payment would be for a repayment mortgage and start making those payments. That will get you the same end result but give you the flexibility to vary the payments up and down according to your circumstances.

To do that, use a mortgage calculator to get a payment for an interest only mortgage and for a repayment mortgage. Subtract the interest only payment from the repayment one and that will tell you how much extra you have to pay.

Inflation is on your side here. The Pound value of the mortgage doesn't increase but your income probably will increase in some way related to inflation over time and that'll make it easier to pay more as time goes on.

Jimbo1976

There would be a few more questions if you want to extend but it depends on the age the extension will take you to. If the extension takes you up to about age 65, you should be fine. If it takes you beyond this BoS will start (understandably) asking how you will support your mortgage in retirement.