My retired mothers interest only mortgage expired - please help! :(

Simon_gloster

Typo sorry. It's unfortunately a fact if life in any contract, they have shelf lives.

It's good Halifax have given the customer time to sort things out but I meant good in the fact they will reclaim what rightly is theirs after a given period should the debt not be repaid. I can't imagine Blemain doing the same.

In this instance they have Bern fair and this thread should set a precedent for others to refer to as a general procedure lenders take for interest only and term end.

Simon_gloster

I agree, a 40 year term is absolute c@@p Holly for someone in their 50's onwards. I'd like to be proven wrong with evidence but feel I'll be drawing my pension before tangible proof is in my face.

holly_hobby

Simon_gloster wrote: »

I agree, a 40 year term is absolute c@@p Holly for someone in their 50's onwards. I'd like to be proven wrong with evidence but feel I'll be drawing my pension before tangible proof is in my face.

Yep as I said in an earlier post, YBS did have this option on a true IO (ie no repayment vehicle) and no max age - and at the time this was essentially utilised as a makeshift lifetime mge (albeit affordability during retirement and monthly payment of interest was reqd), but this was withdrawn several yrs ago.

I don't know in todays regulation, how extending by upto 40 yrs, without any repayment vehicle in place, would satisfy FCA responsible lending regs and indeed the lenders own affordability criteria - as of course the term extention would essentially be new borrowings and assessed as such .... I don't doubt that Jimbo has been told this by someone, but I do doubt its accuracy.

Anyhoo, he'll explain when he pops up again ...

Holly x

lonestarfan

Unfortunately, the OPs parents effected a 50k interest only loan 5 yrs ago - without any foresight on how to repay it (other than one would imagine sell the property) , so the onus is unfortunately somewhat on them for the situation they now find themselves in,, which would have been clearly apparent at the time of drawdown TBH.
Holly[/QUOTE]

I don't disagree that they lacked foresight. What I don't see is why the lender can't just cut them a new agreement for say 10, 15, 20 yrs that they can pay back on a proper repayment basis. Ok so in this example then the people can't do that as they don't have enough monthly income to pay a substantial repayment monthly amount.
So say a borrower found themselves not having the foresight to make substantial monthly amounts overpayments but they now realise they should start getting the debt down and they do have a monthly income that they could pay say £50,000 over 15 years on the mortgage rate of say 4% or whatever rates are these days why wouldn't a lender let them do that? It's more manageable to go onto a repayment mortgage than to conjure up £50k overnight even if a borrower is a pensioner.
Maybe its just my attitude that is out of step with the rest of Society but I just can't see why a lender can't just do a new agreement rather than see people having the upheaval of moving very fast into rented accom irrespective of whether the situation is of their own making when the borrower is brave enough to say what a stupid idiot I am not realising this is coming faster than I thought and now I haven't got the money to pay you off with a lump sum but I can pay larger monthly instalments now to pay it off over 10,15,20 yrs etc
From what I've seen of your post on this thread Holly you are supportive and trying to find a way through for these folk so what's wrong with my idea if it was folk who had enough monthly income now?

holly_hobby

There's nothing wrong with the idea, if the extended term is supported by affordability during that time AND the mge term ends before teh individual reaches the lenders max age at redemption, which is 75 yrs with most lenders (inc Halifax), and indeed on interest only some (ie HSBC) restrict it to just 60 yrs of age.

As I suggested way back when, IF the OPs parents have sufficient supportive income and the applicant a clean history, they could source a repayment mge for os mge balance, with a lender whom doesn't have a max upper age (of which there is 1 high st lender I know of), which essentially means they could extend the mge term to a grand old age (capped by max mge term of 40 yrs) ... IF affordability during the requested term is substantiated.

So in essence, no your idea isn't utter madness - but there are various constraints depending on age, status and lender, that could mean its a no goer for an older applicant (such as with the OPs parents).

Hope this helps

Holly

Simon_gloster

If a new loan of say 15 years wad agreed then fir whatever reason the payments couldn't be made, then the lender has to apply to apply to scourge to repossess. If they judge found that they agreed a loan irresponsibly then the lender had no case. They are better off fighting their case on what they agreed originally as it's easier to repossess.

It sounds awful, but default thinking from a lender is ease of repossession do caution has yo be made on cased outside normal lending criteria.

lonestarfan

Just remembered tho that I should add in that it ought to be a low LTV in case of possession so the lender doesn't lose out if repossession needs to happen

holly_hobby

lonestarfan wrote: »

Just remembered tho that I should add in that it ought to be a low LTV in case of possession so the lender doesn't lose out if repossession needs to happen

Doesnt work that way - the loan must be affordable during the term regardless of LTV or borrowing, otherwise as Si. states the Judge may reject any petition for possession, due to irresponsible lending practices (which would also fall foul of FCA regs).

Hope this helps

Holly

lonestarfan

Gosh Holly and Simon you type fast! Mind you Simon yours is a bit inaccurate lol.
Simon - you typed your reply by the time I added my post about repossession etc but thats an interesting point about the judge. I can see what you are saying but I've never looked at it that way.
Thanks Holly. I see what you are saying. Basically it would be like the lender looking at it as a new application again and looking at the income and considering if is it affordable, is the LTV ok and what age are they now to identify max term etc.

holly_hobby

lonestarfan wrote: »

Gosh Holly and Simon you type fast! Mind you Simon yours is a bit inaccurate lol.
Simon - you typed your reply by the time I added my post about repossession etc but thats an interesting point about the judge. I can see what you are saying but I've never looked at it that way.
Thanks Holly. I see what you are saying. Basically it would be like the lender looking at it as a new application again and looking at the income and considering if is it affordable, is the LTV ok and what age are they now to identify max term etc.

Spot on chuck !

H x