72 yo complains that Bank won't renew his Interest Only Mortgage

ukcarper

Couldn't he get a lifetime mortgage I believe quite a few people do.

kabayiri

He could try Wonga.

How long would the "slider" be for £180K you think?

chewmylegoff

Conrad wrote: »

Is there anything particularly wrong with maintaining an interest only mortgage as long as the monthly dues keep getting paid and in the scheme of your life represents a small proportion of your equity?

Once again this is largely down to The FCA (FSA) placing unnecessary burdens on lenders to 'act responsibly' as defined by a very narrow view of what it means to be a responsible borrower / lender.

Nothing wrong with it but when you know that you will be 72 years old at the end of the 25 year term you should probably make some kind of provision to pay off the outstanding element (either by saving up, selling other assets or downsizing) in case the bank decides it might not think you are good for another 25 years.

The bank probably doesn't want to end up as a creditor of his estate - it is only sensible to avoid this sort of situation if you can as even if you have a fixed charge over an asset you might have to wait years for it to be sold by the executor and you have no guarantee the estate will continue to pay the interest.

In this case the individual hasn't saved, is unwilling to sell his other assets at their market value and won't downsize, yet he is screeching that it is the bank's fault.

Radiantsoul

To some extent this man strikes me as the kind of person who ought to have an interest only mortgage. I mean the interest rate should probably be higher than "normal", but he is no great credit risk and the bank will only lend the money out elsewhere(probably for a lower return and incurring more risk).

purch

chewmylegoff wrote: »

In this case the individual hasn't saved, is unwilling to sell his other assets at their market value and won't downsize, yet he is screeching that it is the bank's fault.

This is an extreme example, but there must be other borrowers who will face, or may currently be facing the same dilemma.

If you borrow money with an agreement to repay on or before a certain date, then it is not unreasonable for the lender to expect you to honour that agreement.

N.B. The £900K "equity" is probably a considerable overstatement. The property includes no land beyond a small garden, and consists of a former water mill, hay barn and cottage, all of which have been renovated at considerable cost to the lender, and no cost to the borrower beyond the interest payments, but which I doubt are worth in the current market anywhere near the over £ 1 million the borrower seems to think they are.

Whatever, the borrower has taken the £ 180,000 lent to him by the Bank and created a reasonable "nest egg" for himself without ever paying a penny of the loan back.

It can't be unreasonable for the lender to require repayment at this stage.

Exile_geordie

chewmylegoff wrote: »

So the property includes a holiday cottage which could be sold separately for £190,000 thus paying off the remaining mortgage? Why doesn't he just do that then?

One solution to the problem could be to sell the cottage currently let for holiday use.
But although it would probably be worth a maximum £190,000 with holiday use, the value could increase to £260,000 as a private home.
But under planning conditions, the building is linked to the business.

Its all there in the story

chewmylegoff

Exile_geordie wrote: »

Its all there in the story

Well there isn't really an explanation there apart from the implicit suggestion that he is greedy so will cut off his own nose to spite his face by not selling it for £190k to pay off his mortgage on the basis it might be worth more than that under certain circumstances which seem unlikely to ever transpire.

quantic

I live near the guy who is featured in the article, I was having a conversation with him about his mortgage issues the other day and all of a sudden he just jumped up off the park bench and started gyrating around with his hands on his hips thrusting his groin in the face of all the passers by and calling them peasants.

IronWolf

Conrad wrote: »

Is there anything particularly wrong with maintaining an interest only mortgage as long as the monthly dues keep getting paid and in the scheme of your life the debt represents a manageable enterprise?

Once again this is largely down to The FCA (FSA) placing unnecessary burdens on lenders to 'act responsibly' as defined by a very narrow view of what it means to be a responsible borrower / lender.

Yes there is if said person will be dead before the loan is repaid.

Nothing to do with the FCA this is not a business loan, its a personal loan.

quantic

All jokes aside, if this guy has not saved up to repay the principle of his mortgage, is not prepared to sell his assets which could easily settle it. Then in my honest and (i feel fair) opinion he deserves to lose it if thats what it comes to.