Loan Charges Reclaim

keyser666

Not sure if anyone can help and apologies but details are somewhat sketchy at present but intend to clarify in due course.

Cliffs:

Mortgage: Abbey National
Mortgage: 25 yrs and Paid

During the 25 yrs parents took out 3 loans, they consisted of:

5K = Double Glazing - Endowment Policy
6K = Home Improvements
25K = Home Improvements - Endowment Policy

Anyway my father who worked in local authority and his retirement last year paid a lump sum of £1**k and a monthly amount of £1***

Their mortgage was paid off recently and they moved however that is not pertinent at present. Father says he had no policy that covered PPI on the 5K or 6K or 25K. He says the endowment policies came in short for the 5k loan and the 25k loan which I think was a common thing at the time that where they were supposed to after a set amount of time of payments that the endowment would cover the loan amount.

The crux of this and the question for my learned members is that the 6k loan from Abbey National was a interest based loan. It was taken out with them and when the parents moved this year they called and asked what was outstanding and Abbey said 6K. So for the last 17 years they have been paying the interest part but nothing off of the loan. When they spoke to the guy from Abbey he said you must have had a loan agreement as we would not have given you a loan for 6k back then without an endowment policy on the loan, he was pretty insistent, but there was not a endowment policy with it. They paid the 6k off and I hear about this tonight.

My thoughts are, 17 years of paying off just the interest, the abbey reps comments I would think this is a unfair loan contract term to pay for 17 years although interest loan and no payments actually paid off the original loan.

Anyones opinions?

dunstonh

So for the last 17 years they have been paying the interest part but nothing off of the loan.

Not uncommon. People were given the choice and many went for the interest only option with a view to starting something later or hoping inflation would be similar to the previous years where mortgages in the final year had been eroded away (ie.. a £3000 mortgage in year one was like £150,000 today but after 25 years, it has the spending power of £3000 today)

When they spoke to the guy from Abbey he said you must have had a loan agreement as we would not have given you a loan for 6k back then without an endowment policy on the loan, he was pretty insistent, but there was not a endowment policy with it. They paid the 6k off and I hear about this tonight.

Abbey havent been around for a very long time. So, I assume this is an old reference. Maybe your father used a broker/adviser. In those cases, the building society didnt put the policy in place. The broker/adviser did. However, 17 years ago, the lender didnt need to be made aware of the policy. They didnt check whether it existed or not.

I would think this is a unfair loan contract term to pay for 17 years although interest loan and no payments actually paid off the original loan.

How exactly is it unfair?

Your parents took out an interest only contract for 17 years and that is what they got. They could have had a repayment mortgage which would have cost them more each month. However, they chose to go with interest only. The clue is in the name.

Unless they are mentally unable to understand what they are doing and cannot read the annual statement they get which reminds them it is interest only and needs a repayment vehicle, they haven't got a hope in hell.

If they are mentally unable to understand it, which is possible if they dont understand two simple words; "interest only" then their may be a case for the lender to answer.