Mortgage Prisoner

RichieNotRich

My partner has a £160,000 interest only mortgage with Bank of Scotland at an SVR of 4.95%! House is worth around £250,000.

Mortgage has 12 years to run. Our plans are to sell up and downsize before year 12.

There are lots of low interest deals out there but my partner would not meet the current lenders requirements, and I am too old to get a mortgage of more than 7 years, which makes the payments unaffordable.

She/we have never missed any payments.

I have been reading the FCA MCOB 11.8.1E which suggests that the banks/building societies should not treat customers with interest only mortgages less fairly than others. Is there any way that BOS is likely to offer a lower rate?

It also suggests in the above document that other banks/building societies should accept mortgage applications from people with interest only mortgages without carrying out affordability tests. Does anyone actually do this?

Any advice or experiences would be appreciated.

amnblog

RichieNotRich wrote: »

My partner has a £160,000 interest only mortgage with Bank of Scotland at an SVR of 4.95%! House is worth around £250,000.

Mortgage has 12 years to run. Our plans are to sell up and downsize before year 12.

There are lots of low interest deals out there but my partner would not meet the current lenders requirements, and I am too old to get a mortgage of more than 7 years, which makes the payments unaffordable.

She/we have never missed any payments.

I have been reading the FCA MCOB 11.8.1E which suggests that the banks/building societies should not treat customers with interest only mortgages less fairly than others. Is there any way that BOS is likely to offer a lower rate?

It also suggests in the above document that other banks/building societies should accept mortgage applications from people with interest only mortgages without carrying out affordability tests. Does anyone actually do this?

Any advice or experiences would be appreciated.

Interest only will not be available with a new lender.


Your exclamation mark next to 4.95% suggests you feel you are being disadvantaged.


In fact you are living in a property valued at £250,000 until you chose to move at a cost of around £660 per month.


Pretty good value.

RichieNotRich

Thank you for taking the time to respond, but you have not provided anything positive.

Interest only will not be available with a new lender.

In the FCA Mortgage Market Review it says 'Lenders are still allowed to grant interest-only loans, but only where there is a credible strategy for repaying the capital.'

Your exclamation mark next to 4.95% suggests you feel you are being disadvantaged.

When the bank base rate is 0.50% then yes I do think that I am being disadvantaged.

In fact you are living in a property valued at £250,000 until you chose to move at a cost of around £660 per month.


Pretty good value.

The question of value is subjective. We can afford £660 per month but would rather part of this be paying off the capital. As it is we seem to be trapped.

Thrugelmir

RichieNotRich wrote: »

I have been reading the FCA MCOB 11.8.1E which suggests that the banks/building societies should not treat customers with interest only mortgages less fairly than others. Is there any way that BOS is likely to offer a lower rate?

It also suggests in the above document that other banks/building societies should accept mortgage applications from people with interest only mortgages without carrying out affordability tests. Does anyone actually do this?

Have you spoken to BoS yet to see if they are willing to offer any concession. Perhaps move part of the mortgage onto a repayment basis.

Thrugelmir

RichieNotRich wrote: »

When the bank base rate is 0.50% then yes I do think that I am being disadvantaged.

What do you believe the connection to be between bank base rate and the interest rate on your mortgage?

BOE base is the rate that the BOE pays for overnight deposits lodged by the major clearing banks.

amnblog

'Lenders are still allowed to grant interest-only loans, but only where there is a credible strategy for repaying the capital.'


It does not mean they have to - and, apart from a few particular circumstances they don't.

The message is not positive as that is the way the world is.

RichieNotRich

Thrugelmir wrote: »

What do you believe the connection to be between bank base rate and the interest rate on your mortgage?

BOE base is the rate that the BOE pays for overnight deposits lodged by the major clearing banks.

When the base rate goes up do you think that the mortgage interest rate will stay the same?

RichieNotRich

amnblog wrote: »

It does not mean they have to - and, apart from a few particular circumstances they don't.

The message is not positive as that is the way the world is.

Have you read the FCA documents that I have referred to?

It is clear that they are concerned about the large number of people with interest only mortgages and are trying to encourage lenders to address this issue.

BOS have not done anything to help us in this matter. When I contacted a local IFA they would not speak to him unless we paid them £100 to register the LOA. Is that treating us fairly?

justcat

RichieNotRich wrote: »

Thank you for taking the time to respond, but you have not provided anything positive.

Not meaning to be rude but unfortunately, not everything you will be told will be positive.

kingstreet

Until lenders decide using the transitional rules benefits them in some way, it isn't going to happen;-

https://forums.moneysavingexpert.com/discussion/5111375

Leon_W

Bank of Scotland have new deals for existing borrowers.


http://www.bosmortgages.co.uk/pdf/product-range-and-current-rates.pdf


Not the greatest I admit but there is a 2 year fix @3.59 available to you.