A question for those coming to the end of an Interest Only mortgage

Charlton_King

SerialRenter wrote: »

Out of curiosity, have the bank expressed an opinion on this? Seems to me that would be seen as a purely voluntary expense on your behalf?

Repayment is generally not advised:
http://www.moneysavingexpert.com/students/student-loans-repay
Although i'm guessing they're post 2012 student loans? which does change things slightly.

Yes, it was purely voluntary. My wife and I took the view that, having been ourselves helped through higher education by the state, we simply couldn't tell our own children 'tough luck, you're on your own'. Thanks to the valiant efforts of Maggie T and subsequent governments, people like us have been saddled with this moral imperative.

Our lender never knew of this decision and why would they?

In any event, while taking it, we were always certain that we could repay the capital if push came to shove, so we have not been irresponsible. This is purely a matter, in our case, of preference and hoping to find the industry geared up and ready to cope with an ageing population who wish to carry their mortgages further into retirement.

Some hope.

Take our present lender, Accord - an impeccable payment record over several products taken out successively with them over many years.

They simply don't want to know.

Leon_W

Hi Thrugelmir


those were the sort of anecdotes I was interested in hearing about.....


"A friend of mine had a £15k endowment shortfall. Santander weren't interested in granting any mortgage extension. There only offer was 2 months grace at the end of the mortgage term to allow a window for remortgaging. Nationwide were happy to offer a 3 year term for the balance. "


Now, there must be a story out there of what happened when they couldn't remortgage, such as in your friends situation (and they were lucky enough to be able ). Did the lender make threats to repossess or was a more amicable solution arranged ?

animox

Hi
I have 2 HSBC mortgages on my home approx £400K
one 30K repayment 10 years to run
one 27K interest only 6 mouths to run, no endowment.

Credit rating shot to bits after business failure, but now stabilised financially.

Wrote to HSBC 9 months ago after FSA letter, they could not advise even though the letter said get in touch if you have a problem, they suggested branch advisor.
HSBC branch advisor happy with affordability etc, but computer said no on credit rating. Suggested HSBC mortgage switch phone line.
HSBC mortgage switch phone line is to do with switching deals and cannot do endowment to repayment switch, suggested I had no chance of re-mortgaging and to call HSBC collections dept.
This I have yet to do.

Spoke to FCA and they gave me all leaflets for what the banks are suppose to do etc.
But it seems to be, that if you fail one of the new rules on affordability or credit rating they would be commercially irresponsible to offer more lending.

My mortgage payment record over the 25 years is perfect, plus I have recently stated making over payments to reduce mortgage and prove I can afford it.

I have done some internet trawling to find out what might happen at end of term and this is the most interesting post yet, I too thought there would be more out there.

All the advice I have had so far, (even from HSBC advisor's, off the record) would be to put my shortfall on to my current repayment mortgage, payments would be affordable and all would be clear before I retire. But this is not possible.

Any advice appreciated and I will keep you informed of my progress.

dunstonh

But it seems to be, that if you fail one of the new rules on affordability or credit rating they would be commercially irresponsible to offer more lending.

Yes. There have effectively been warnings by the regulator that interest only should not be used as a way of maintaining affordability and putting a problem off until later.

My mortgage payment record over the 25 years is perfect, plus I have recently stated making over payments to reduce mortgage and prove I can afford it.

Its not perfect. Indeed, its turned out to be rather foolish. It has taken you 24y years and 6 months to try and sort out a repayment vehicle.

All the advice I have had so far, (even from HSBC advisor's, off the record) would be to put my shortfall on to my current repayment mortgage, payments would be affordable and all would be clear before I retire. But this is not possible.

Why is it not possible? I can understand HSBC maybe not doing it as they like low risk cases they can cherry pick. However, is there something stopping you do it with other lenders?

getmore4less

It exactly this sort of long term incompetence that needs weeding out.

If you can't pay your debt in the time you said you would start selling things

If that means your houses then so be it.

Or raise money based on your income and assets that fits with current criteria

If you run a business and have borrowings against your own home that make that happen then tough if you have to sell something to pay off the business debts or make them real business debts which have different lending criteria.

If you made investments that need a bit more time, tough should have put some contingency into the planning.

The it will be all right I can always extend my debt was never an acceptable plan.

kidmugsy

Charlton_King wrote: »

My wife and I took the view that, having been ourselves helped through higher education by the state.

You weren't: the subsidies you received came from taxpayers, some of them probably rather poor.

kidmugsy

By the way: "In addition, maintenance grants were replaced with repayable student loans for all but the poorest students." That wasn't Thatcher, but you probably knew that anyway.

Thrugelmir

animox wrote: »

All the advice I have had so far, (even from HSBC advisor's, off the record) would be to put my shortfall on to my current repayment mortgage, payments would be affordable and all would be clear before I retire. But this is not possible.

The alternative is to sell the property then.

There's going to be no easy option. Choice is yours if you wish to retain the property.

jamesd

animox wrote: »

call HSBC collections dept.

Don't call them. Write to HSBC. Make them an offer of their choice of either:

1. an arrangement to repay the interest only capital at £500 a month from now until the balance is cleared. Adjust the £500 as required and give the correct number of months for that amount.
2. a remortgage of the interest only portion onto a repayment mortgage of the same term as in 1.

With a viable offer from you that you have demonstrated you can afford, that will clear the debt in a reasonable time and with them already on the hook for having you as a mortgage customer for ten more years, there's no reasonable chance that they would be able to get a repossession order. Your offer is reasonable and their rejection would be unreasonable and they wouldn't get a judge to agree to it.

Thrugelmir

Leon_W wrote: »

Hi Thrugelmir


those were the sort of anecdotes I was interested in hearing about.....


"A friend of mine had a £15k endowment shortfall. Santander weren't interested in granting any mortgage extension. There only offer was 2 months grace at the end of the mortgage term to allow a window for remortgaging. Nationwide were happy to offer a 3 year term for the balance. "


Now, there must be a story out there of what happened when they couldn't remortgage, such as in your friends situation (and they were lucky enough to be able ). Did the lender make threats to repossess or was a more amicable solution arranged ?

Apologies for the late response. Was away and missed your post.

My friend is a Maternity Matron in the NHS so in terms of status obtaining a mortgage or unsecured loan (an option we discussed) was never an issue. Santander were very business like and non threatening. Plainly not interested in any further business. Like most people she left it late to address the matter! The 3 months grace was offered instantly. My personal reading of this was that Santander could say they offered assistance if need be at a later date. Though has been dais elsewhere on this thread. On commercial grounds lenders have no actual obligation. So one imagines that if the borrower took no steps within the 3 month window. Then the pressure would be cranked up.