can my mortgage arrears be deducted from my ppi refund?

sasha500

today I have been offered a ppi refund from RBS on a chain of loans that have been paid and closed. It says on the offer "subject to clearance of any arrears or indebtedness you have with the group". I have arrears on my mortgage but they are in the process of being capitalized although this could take some time. if i accept the offer will they take the arrears from the pay out?

Thanks x

roonaldo

they most probably will yes, you owe them money and they owe you money.

you need to call them and ask.

sasha500

even though they are in the process of adding them to the term of my mortgage? I.m trying to avoid asking them so i don't bring their attention to it, i was hoping that the arrears will proceed to be added to the mortgage and i.ll still receive a pay out?

sasha500

would i receive the full pay out if i wait until the process of capitalizing the arrears is complete?

roonaldo

the thing is you need to ask them. if the question is can they? then yes. will they? who knows. the complaints department and arrears department are separate and probably don't liaise with each other, probably in separate offices too.

sasha500

ok thank you, think i may have to bite the bullet and ask them, or i may just risk it? oh i.m in a pickle lol x

happycamel_2

Unless you are going to use the money to pay back something with a higher interest rate than your mortgage then you'd be sensible to use the money to reduce your mortgage value.

safestored4

Look at it from the banks point of view. If you have mortgage arrears at a time of record low interest rates (We presently have the lowest interest rates since the Bank of England was founded in1694) how will you cope when interest rates eventually go up? From this perspective it makes sense for the bank to seek to reduce their exposure to potential bad debts. Equally, the more that you pay off your mortgage now the easier it will be for you once rates inevitably rise.

sasha500

i understand these points, however i have just extended my mortgage terms and my repayments are really quite low. my reason for this was on the advice of my dad and uncle that i would eventually inherit both their houses which have no mortgages and then would have assets to sell to clear my own mortgage and enough left over. if my arrears have been capitalized have they not then accepted that they will be paid over the mortgage term and therefore wrong to deduct them from me?

safestored4

You may or may not inherit your father and uncles houses, there is no guarantee of this. For example, who is to say that the houses may not eventually have to be sold to meet care home fees? The situation in that respect is presently uncertain. Banks know this and are naturally adopting a cautious stance.