Lender's interest only investigation letter

Time_zone

Hi
We've received a letter from our lender asking us detailed questions about how we intend to repay our interest only mortgage in several years time. The account has been conducted impeccably from the start.
The letter states (not unreasonably) that it's our responsibility that the sum is repaid at the end, and also states that the lender cannot advise on suitability of our repayment plans. So far so good. However, at the end of the letter, and contradicting the above, there is a threat to move some or all of the mortgage to repayment if they are not satisfied.

We do, in fact, have a variety of good strands to repay the sum starting from early partial repayment in a couple of years time. These are robust and do not rely on luck or good fortune. However, the money is not available yet.

My questions are:
1. Can the lender retrospectively change conditions years into the term?
2. Given that it IS our responsibility to find the money and not theirs to offer advice, do you see the logical nonsense contained in the letter as we do?
3. What is the likely consequence of ignoring the letter / responding with a statement that it's an existing contract and they cannot change it now.

Informed comments are very welcome.

holly_hobby

I am guessing this is Halifax ?

The lender isn't changing conditions - your interest only mge has always had the requirement of a repayment vehicle, your annual statement always highlights this, as did your original mge offer.

They have a duty under the recent FSA (now FCA) requirements re IO lending to verify the mortgagor has the ability to repay the mge at redemption (indeed expecting my own similar letter to arrive).

Where there is no suitable repayment vehicle, they can assess whether the mge may be changed to capital and interest - whether they are able to force the change under TCF regs is a different matter, and I don't yet know of a case where this has occurred ... but its early days with this !

Hope this helps

Holly