Shortfall on Mortgage

mugwumps59

Hello
I wonder if anyone can advise me please. My Mortgage is with The Woolwich now dealt with by Barclays , it is an Endowment and is due to be paid in full on May 16th 2013.
I have a shortfall of 11,995 . I filled in forms for an extention and they have refused as my Husband is on a small personal pension, this was at a better rate as well as we have been paying 6.1% .I have now been told that when the final payment is received I can extend the one I am on possibly-but will only be allowed to overpay 10% a year . The Branch say there are no mortgages at that rate they are all lower so I am worried that they will make me continue at the higher rate.
Can anyone help please.:(

holly_hobby

Generally when a mortgage redemption comes and there is a shortfall, they may extend the term by up to 5 years in respect of the residual amount left outstanding (depending on status), but this will be on a capital and interest (repayment) basis.

Given that you will have been aware for several yrs that there is a possible shortfall to target, but appear to have not put any remedial action in place to address this, you have now somewhat left yourself extremely vunerable (with just over a month left until scheduled redemption !) to any terms of extentsion that may be offered by the lender.

I'm so sorry you find yourself in this position, one can only hope that your actual endowment proceeds, will be more healthy than currently estimated, or even meet target (which is possible ) ..... of course it could go the other way too.

If when the time comes, you can't afford the repayment terms offered by your lender, you could look to remortgage, but given the income issues (and poss age) you mention, selling the property and going into rented/purchasing for cash, may be the only viable option available - and unfortunately you may need to start considering this as a real possibility.

Hope this helps ... I of course wish you well

Holly x

mugwumps59

Thank you for your reply Holly. We were told by an Advisor in the Branch when we enquired about a shortfall about 10 years ago and were told we had nothing to worry about but we decided to put as much as we could afford on repayment and that was lucky we did.

I just cant understand why they know we have paid every month even when my Husband lost his job but won't let us extend on a better rate but will let us carry on as we are at 6.2%:(

holly_hobby

The fact that converted as much as you could afford to repayment 10 yrs ago, is to be commended, as most peeps when they learned their endowment may not reach target, simply buried their head ... so you have certainly lessened the impact of a depressing situation .. well done ! x

The current issue is the fact that to extend the mge term, requires a new affordability assessment (as its essentially new lending), and in order to demonstrate responsible lending under FCA requirements, affordability and income into retirement must be assessed - which is why their hands will be a little tied if, given you say hubby's retirement income is low, affordability now doesn't completely stack up.

However, under FCA Treating Customers Fairly (TCF) regs, they should try and meditate a satisfactory conclusion - the only suggestion I can give, is to keep over paying as much as possilbe, see what your policy matures at, and then evaluate your situ as to whether they will give you any leaway, or whether they will demand immediate redemption of the residue and how you will go about satisfying that request.

Keep us posted ... with fingers, eyes and toes crossed for a positive result at endowment maturity xx

Holly x

Thrugelmir

mugwumps59 wrote: »

I just cant understand why they know we have paid every month even when my Husband lost his job but won't let us extend on a better rate but will let us carry on as we are at 6.2%:(

Will be a policy decision so not directed at you personally. Shortfalls on endowment policies have been known about for years. So lenders will use this policy to encourage customers to overpay their mortgages to clear them quicker. Rather than customers taking advantage of the situation. Some customers will have low interest rates on thier mortgages so will be delibrately looking to extend them further.