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Interest only letter from C&G

Hello
I've joined this forum as I'm hoping one of you lovely Lewisites has some experience of what I'm posting about.
We have a part repayment, part interest only mortgage, and we've received a letter from our provider asking for confirmation of how we plan to pay off the interest only bit. We did have an endowment, but that was cashed in to avoid financial ruin some time ago, and we intend to pay down the mortgage over the remainder of the term (6 years or so) by using the money we currently pay on a loan which will be repaid next year, and overpaying on the repayment part every month. By my own calculations this will cover the interest only amount by the time it's due, but we don't have any formal plan in place, which is I think what they want. How should I word my response to their letter? Will a polite - we know what we are doing, don't bother us again - do? I've been told that as long as we keep up our payments they can't make us convert it to all repayment (if they did we certainly couldn't cope with how high those repayments would be).
Sorry to have gone on a bit - anyone got any suggestions?
Thanksx
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Comments

  • TrickyDicky101
    TrickyDicky101 Posts: 3,534 Forumite
    Part of the Furniture 1,000 Posts
    You could file it in the bin (ie the request you have received).
    make us convert it to all repayment (if they did we certainly couldn't cope with how high those repayments would be).

    If that's the case then how do you expect to pay off the interest only in the remaining 6 years? Or do you mean you couldn't manage at the moment because you also have this loan to pay off, and once done so then you could afford a repayment mortgage?
  • elmer
    elmer Posts: 939 Forumite
    Part of the Furniture 500 Posts Photogenic
    why don't you write back with the plan you have outlined above, it seems thats all they are asking for?
  • andyfromotley
    andyfromotley Posts: 2,038 Forumite
    Yup, tell em what you have told us, thats the truth and it seems reasonable.

    How much is your loan for and how much is your IO part of the mortgage? It may well be doable if the loan is a lot and the IO small but you have to make sure your figures are right.
    £1000 Emergency fund No90 £1000/1000
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  • silvercar
    silvercar Posts: 49,930 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    Had similar from a different lender recently. Box ticking exercise by them, so when people get into trouble at the end of the mortgage term, they can't claim that they were unaware.
    I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    I've been told that as long as we keep up our payments they can't make us convert it to all repayment (if they did we certainly couldn't cope with how high those repayments would be).

    Sounds like you need to look ahead now and make plans for the future. As higher interest rates won't make repaying the debt any easier.
  • Thanks to everyone who took the time to reply to my post. Tricky Dicky, filing it in the bin was indeed my preferred option but I then received a second letter, so they are being fairly persistent. Regarding your question about how we expect to pay off the interest only if we don't think we could cope with the repayments if it converted to repayment, well that's sort of obvious as I've outlined - because of what would be a short term the repayments would really rocket out of our reach, even with the current £600 loan repayment put towards it. Whereas if we use that and other money we can put that way to clear the repayment early then we are saving on interest there. Also, if the worst came to the worst and we did have to sell our home to honour the interest only part of the agreement because of a shortfall then I would rather do that in six years time than in a couple of years because we have possibly fallen behind with sky high repayments forced on us by the bank. Yes, Silvercar, my instincts tell me that it is just box ticking to cover themselves, and if that is the case that's fine by me.Andy and Elmer, thanks very much for your responses. I've done my maths over and over and over (often at 4am when I've been lying awake thinking about it) and yes, it is doable...just...and if there's a smallish shortfall at the end of the term we could cover that with a short-term interest only credit card sum, which would then be paid off with the money we were putting towards our mortgage payments. So yes, it does all add up, as long as, as I've said, they can't force us onto all repayment...that's my concern, and what I really hoped to have some input about. I'm going to write back telling them we've got it covered and to come calling again in six years, VERY politely, of course, and see if they let us get on with it or push further. Thanks again all.
  • silvercar
    silvercar Posts: 49,930 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    This is the second time we have had this letter. Last time we were required to just sign that we had plans in place and knew that the mortgage was interest only and understood that the capital needed paying off. I binned the first letter and then had phone calls, so I just signed it and returned.

    That was last Summer. This time they wanted details. There was a whole proforma to complete and send back. Someone from their interest only mortgage team then phoned to confirm the details.

    Form to complete here.

    So it seems they are taking it all a lot more seriously now.
    I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • shortchanged_2
    shortchanged_2 Posts: 5,546 Forumite
    silvercar wrote: »
    This is the second time we have had this letter. Last time we were required to just sign that we had plans in place and knew that the mortgage was interest only and understood that the capital needed paying off. I binned the first letter and then had phone calls, so I just signed it and returned.

    That was last Summer. This time they wanted details. There was a whole proforma to complete and send back. Someone from their interest only mortgage team then phoned to confirm the details.

    Form to complete here.

    So it seems they are taking it all a lot more seriously now.

    And so they should. How many posts do we see on here with the good old 'I haven't got the money to pay off my mortgage when my interest only mortgage runs out and I don't want to sell up. Please help'.
  • Shortchanged - you say 'And so they should. How many posts do we see on here with the good old 'I haven't got the money to pay off my mortgage when my interest only mortgage runs out and I don't want to sell up. Please help'. That is certainly not what my post was saying, if you read it carefully you will see I am taking every possible steps to make sure that isn't the case, and I was simply looking for advice about the letters. Your remark was less than helpful. I'd also like to point out that when we were 'sold' the interest only mortgage we were actually told we might even have money to 'splurge on a holiday' when the term was up and our endowment paid up...which of course hasn't happened. We are not gamblers by nature and were foolish enough to believe it would cover the amount borrowed, not thinking for one minute that we would be sold a useless under-performing policy by someone who worked in a bank...this was well before the caution and suspicion that we now have about banks existed. I have held off joining this forum before for fear of comments from people with axes to grind, and it seems I was right to do so.
    Silvercar - thank you very much for your reply. I appreciate it, and as I said before I'll respond to their letter with a clear outline of intent.
  • Jhoney_2
    Jhoney_2 Posts: 1,198 Forumite
    Shortchanged - you say 'And so they should. How many posts do we see on here with the good old 'I haven't got the money to pay off my mortgage when my interest only mortgage runs out and I don't want to sell up. Please help'. That is certainly not what my post was saying, if you read it carefully you will see I am taking every possible steps to make sure that isn't the case, and I was simply looking for advice about the letters. Your remark was less than helpful. I'd also like to point out that when we were 'sold' the interest only mortgage we were actually told we might even have money to 'splurge on a holiday' when the term was up and our endowment paid up...which of course hasn't happened. We are not gamblers by nature and were foolish enough to believe it would cover the amount borrowed, not thinking for one minute that we would be sold a useless under-performing policy by someone who worked in a bank...this was well before the caution and suspicion that we now have about banks existed. I have held off joining this forum before for fear of comments from people with axes to grind, and it seems I was right to do so.
    Silvercar - thank you very much for your reply. I appreciate it, and as I said before I'll respond to their letter with a clear outline of intent.

    I really do not think that shortchanged's comment was aimed at you - it referenced Silvercars last sentence and more in agreement with you in that in the not so distant past, banks did/allowed things just as you describe and that a stop to it is welcome.
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