Lloyds - Statement of Personal Details

[Deleted User]

I have to make a call to Lloyds tomorrow and wonder if someone can give me some advice so I am better prepared.

Unfortunately I had to close down my business about 18 months ago leaving me with a Personal guarantee of around £90k to deal with. The bank had taken a second charge against my house when I took out the business loan. The business had made all the repayments in full and on time until we closed.

I was fortunate to get a job fairly quickly and i negotiated with Lloyds to continue to make the monthly repayments personally at the same level as the business had been making. I set up a standing order just over a year ago and all payments have been made on time and the balance is coming down. The loan has about 4 years left to run (it was originally 10 years).

I have today received a letter from them saying that they need to carry out an annual review and asking me to complete a form with details of all my assets, liabilities, income and expenditure. Am I within my rights to refuse to do this as I have not defaulted on any of the terms or conditions of the loan? I don't really understand why they want this information - it will just show them that actually I can't afford to make payments at the level i am making them! I have been living with my partner for 6 months and he pays all the bills so I can make the loan repayments. The form also asks for his income, expenditure details but I don't see why they have any right to that information. He was not party to the business or the personal guarantee.

My gut instinct tells me they don't have any right to this information while i am continuing to make full payments but i don't want to go in all guns blazing and put their backs up. Any advice please?

DevCoder

You are within your rights to refuse, anyone can refuse anything but:-

No, in my opinion, you need to fill the form out, if it proves that you are paying them above your means then the review could go in your favour.

You have a personal guarantee on this loan, they can call it in whenever they want, however best practise dictates a certain review period which is annual in this case.

You might want to check your agreement with Lloyds as most banks stipulate a review period at which point they can call any credit lines in.

If what you are saying is true then why would you not fill the form out, Lloyds have already played nice with you in changing the terms to a personal level at the same rate as the business agreement.

chalkie99

I don't know the actual answer to your question as it will depend on what your loan agreement actually says. Can you dig it out and have a really close read of it?

You might be interested in a thread currently running on the Mortgage section - see the following link:
https://forums.moneysavingexpert.com/discussion/4291725

The poster there seems to have a clause in their agreement which allows the bank to review and re-negotiate.

[Deleted User]

There was no clause in the original contract which allowed for renegotiation - the interest rate was fixed at 1.5% above base rate for the term of the loan -ie 10 years.

It is my intention to clear the loan before the 10 years is up as I am putting my house on the market next year and will pay it all off once it is sold. In the meantime I am making payments equal to the amount the bank would be receiving if the business was still operating so I fail to see what they think they can gain by such a detailed review. I am already making repayments of £1500 per month! The form is very intrusive, asking for my employers details, pension arrangements, insurance policies etc. I just feel its none of their business! They agreed the loan and they placed the charge which they can enforce if the payments are not made. However, they have been made completely in line with the original loan agreement.

Maybe I will put the house on the market a bit sooner than planned. I can't wait to get them out of my hair.

[Deleted User]

if the bank have a second charge on your home wont you need their permission to sell?

[Deleted User]

No, I don't need their permission to sell. The charge is just a security for if the loan is not paid. The loan is being paid and has been for the last 5.5 years. There is no mortgage on the house and more than enough equity to cover the loan. The loan was taken out as a business loan over 10 years, the 'charge' was just an additional security for the bank. There was never any suggestion that if I sold the house in the 10 year period of the loan I would have to pay back the outstanding amount of the loan in one lump sum. The 'charge' only gives the bank any rights over my home in the event of the loan payments being defaulted which they haven't been

DevCoder

You contradict yourself with the two last statements.

If you are not expected o pay back the loan with a lump sum on sale of the house, how can the bank then have a "security" charge on the sold house if you then default?

[Deleted User]

We appear to have gone off track a little from my original question so think i'll call a halt now. Thanks anyway

antrobus

victoria61 wrote: »

... There was never any suggestion that if I sold the house in the 10 year period of the loan I would have to pay back the outstanding amount of the loan in one lump sum.

No one is going to buy the house unless the charge is cleared. Therefore in order to sell the house you'd need to reach some kind of agreement with the person who holds the charge, which would (in this case) likely involve settling the loan in full.

victoria61 wrote: »

..
The 'charge' only gives the bank any rights over my home in the event of the loan payments being defaulted which they haven't been

It all depends on what form your business took. Your use of the term 'personal guarantee' implies that the business was a limited company. If your business was a limited company, 'had to close down', and was thus unable to make repayments on the business loan, then that loan would now be in default, thereby triggering your personal guarantee. The fact that the lender has accepted your proposal to continue "making repayments personally at the same level as the business" would be a matter of goodwill on their part, and wouldn't change the fact that, under your personal guarantee, the loan balance was payable on demand.

But that's just me guessing.

[Deleted User]

victoria61 wrote: »

We appear to have gone off track a little from my original question so think i'll call a halt now. Thanks anyway

so we told you what you knew but didnt want to hear?:rotfl:

jonesMUFCforever

The bank holds all the aces here - they have a charge over OP's property.
I would complete your section of the document but say that the partner is not a party to the loan or guarantee.

If you continue to pay as now they will not take any action.

They might be worried that the partner might be making a case for getting a share of equity here (and diluting the bank's security).

You might want to enquire whether you could take out a mortgage to pay off the business loan and finish the guarantee.