Proof wanted.

Clarkdon

Hello, my mortgage lender has requested proof that we will be able to pay off our endowment mortgage in 2017. We have paid monthly since 1992 with out default. I submitted details of my and my wifes income, pension details (final salary) and endowment details (in the red but 4 years to run). I stated that we would use either pension lump sum, personal loan, savings to make good any endowment shortfall. What's troubling me is; we signed an agreement in 1992, have met our monthly payments faithfully for the last 21 years but now the lender is wanting personal financial detail from us. The letter they sent us states that if we can't satisfy their request they could force us onto a repayment mortgage. Is this normal? If we fail to pay off the mortgage then by all mean chase us for the money but why this sudden demand for our financial details. Thanks.

Senior_Paper_Monitor

Covering their !!!!!! - you have stated that you have a plan B so they can't now be accused of 'misselling you'.

They'll leave you alone now - and if they don't tell them to.

ValHaller

Clarkdon wrote: »

The letter they sent us states that if we can't satisfy their request they could force us onto a repayment mortgage.

Well, it might not be a bad idea to overpay to meet the shortfall or go onto repayment terms for the fraction of the mortgage on which you expect to have a shortfall. So if at the moment you are on Interest Only for £50,000 and you expect your investments to pay back £40,000 you could consider going repayment on the remaining £10,000. Over 4 years that will be an extra ~£200/month to find. But it has advantages: - It will cost less than £10,000 extra, because you have budgetted for the interest with your mortgage. And it will definitely be cheaper than a personal loan which will cost you more than £10,000.

If the commitment of £200/month is too much, just overpay what you can afford.

Thrugelmir

Senior_Paper_Monitor wrote: »

They'll leave you alone now - and if they don't tell them to.

Required by FSA to do so. So expect them to follow up if not satisfied.

Let_Us_See

Just part of lender's responsibility to their borrowers. Although your endowment has a shortfall forecast, you state you have other assets to cover. Simply, provide this proof to the lender and I am positive you will retain your IO mortgage.

Clarkdon

Thanks for the replys. I know I could switch to repayment; it was just the suddeness of the lenders demand. Not sure about the FSA thing though. Is it a FSA Regulatory Requirement for every lender to write to borrowers with four years endowment to pay and ask them for personal finacial details? If so, I can't find any and has anyone in this forum received the same letter. Anyway, it's not a large amount, under 10k so I'm not losing a lot of sleep over it. Cheers

holly_hobby

Following the recent FSA review, it is now a requirement that lenders verify with all IO borrowers, at least once during the lifetime of the mge, that they have a suitable repayment plan (endowment, or other acceptable method/vehicle), in place.

So don't take it personally, this will happen to all those whom remain on IO, as its a regulatory requirement.

The good news is that you do have provision, and an awareness of whats reqd to redeem your mortgage - although I understand how you would be a little surprised at the timing, but the check would have had to come at some point between now and 2017.

Hope this helps reassure you.

Holly x

safestored4

A newspaper article reproduced today on the House Price Crash website reports that it is presently estimated that only one in three holders of interest only mortgages has a repayment vehicle in place to fully repay the capital at the end of the mortgage period.

Even if this turns out to be an exaggeration the sums involved run into many billions and lenders are taking steps to ensure that borrowers are aware of their responsibilities and to close off the possibility of an avalanche of PPI type complaints in ten or twenty years time.

Thrugelmir

Clarkdon wrote: »

Anyway, it's not a large amount, under 10k so I'm not losing a lot of sleep over it.

Worth planning now to clear it now though. Months soon past and circumstances can change rapidly.

Clarkdon

Thrugelmir wrote: »

Worth planning now to clear it now though. Months soon past and circumstances can change rapidly.

Zoom....you've got a point