Interest only letter from C&G

shortchanged_2

Always_Hopeful wrote: »

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.

Unfortunately you did take a gamble when you took out an endowment mortgage because I'm guessing you took it out to help reduce your monthly payments and as you stated to give you a little present at the end of it.
You would also at the time of taking the mortgage out of had the safe option of a repayment mortgage which would have paid off your mortgage in full.

Now while I have more sympathy for cases like yourself than people who took out IO mortgages with absolutely no plan to pay it off, the fact remains that you still took a gamble

JimmyTheWig

Always_Hopeful wrote: »

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

No, but we do see many posts on here saying just that. So good that the banks are doing something about it. People with a plan can carry on as planned. People without will hopefully now think about it rather than panic at the last minute.

if you read it carefully you will see I am taking every possible steps to make sure that isn't the case

I agree that you think that you are, but I'm not convinced that you've done your sums right.
There is no real difference between repayments and overpayments, so if you can't afford one you can't afford the other. The whole point of this letter is to make you think about this.

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.

It hasn't happened, mainly because the endowment was cashed in. So in some ways it is a good job you went down that route as it meant you had an endowment to cash in when you needed it. And you could pay part of your loan interest-only when you needed to.

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.

As shortchanged said, this was a gamble. Though I accept that it wasn't necessarily seen as a gamble in those days. And I agree with you about trusting the banks.
Though as I say above, for you this was probably the right thing to have done in hindsight anyway.

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.

It's a hazard of an open forum. Generally I find people are helped more than they are criticised. But sometimes you need a bit of a thick skin.
If you know that your plan is solid and you won't be left in the position of not being able to pay it off then it doesn't matter what strangers on the internet think, does it?

Thrugelmir

Always_Hopeful wrote: »

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.

There's very few axes on this forum. Just pragmatism. As while many events are outside of peoples control. We've had 6 years of record low interest rates. So for the vast majority it does come to personal choices in my personal experience.

silvercar

Jhoney wrote: »

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.

I agree that it is welcome that the lenders are taking an active stance in notifying and helping to ensure that borrowers are aware of their commitment to pay off the mortgage.

They aren't actually putting "a stop to it". These mortgages are in place and provided borrowers make their repayments, there is little the lender can do about it. I found it refreshing that my lender includes a box for those that are planning to sell up to clear the mortgage. Both that they acknowledge that this is an option for some people and that it forces people to consider outside the box (of increasing payments/ finding the money elsewhere.)

Fizzy11

We remortgaged years ago & was asked if we wanted the whole mortgage interest only. We have an endowment which finishes in 5 years. Yes believe it or not we kept the endowment because I knew it had the life insurance factor. It will repay some of the mortgage but not all so we have saved & saved in an Offset pot. We didn't convert to repayment because keeping the repayments low gave us flexibility. Yorkshire BS also rang to ask us & they were quite happy with explanation. This isn't C&G or Yorkshire it is the FCA making sure people are aware. Nothing sadder than man of 73 calling our office to say he didn't understand why he was being forced out of his home. Many many people should not have been sold these mortgages & that's why lenders are contacting people. Many people just wanted to buy & didn't listen to brokers or banks.

shortchanged_2

Always_Hopeful wrote: »

Shortchanged - a) ' Unfortunately you did take a gamble when you took out an endowment mortgage because I'm guessing you took it out to help reduce your monthly payments and as you stated to give you a little present at the end of it.' No, We did not take it out to get a 'little present at the end of it', all we thought we were doing was covering our mortgage, we were not interested in anything other than that. We were never told it might not cover it.

b) 'You would also at the time of taking the mortgage out of had the safe option of a repayment mortgage which would have paid off your mortgage in full.' NO, We were not given any option. Interest only was all the advisor at the bank wanted to talk about.

c) 'Now while I have more sympathy for cases like yourself than people who took out IO mortgages with absolutely no plan to pay it off, the fact remains that you still took a gamble' NO, we were not aware it was a gamble. Call us naive, but as far as we were concerned we were being advised by the bank and trusted that we were being given the right advice. Don't forget that at the time we took out the mortgage people were not as aware as they are now of the interest only miss-selling that went on.
Also, JimmyTheWig, regarding ' no real difference between repayments and overpayments', yes there is, unless I am being really stupid, in that overpayments bring down the debt, thus saving interest, which can then in turn go towards paying off the interest only.
Thanks to everyone else who has taken the time to give their experience of similar situations.

I'm sorry but I do not believe that you were never offered a standard repayment mortgage.

More likely the blinkers went on when the broker mentioned lower monthly payments and a little left over at the end for a holiday.

Mattygroves2

Always_Hopeful wrote: »

Also, JimmyTheWig, regarding ' no real difference between repayments and overpayments', yes there is, unless I am being really stupid, in that overpayments bring down the debt, thus saving interest, which can then in turn go towards paying off the interest only.

Exactly the same happens with a repayment mortgage - the capital payments you make reduce the principal and so less interest is charged. Overpayments give you flexibility in that you don't have to make them every month but the effect on the balance of your mortgage is the same.

Always_Hopeful

Shortchanged - you are so very wrong, we were not offered a repayment mortgage, and as far as we knew we were dealing with a member of staff at the bank, not a broker. And no, as I've said before we were not after a little left over for a holiday, I just mentioned that that's what he'd said to point out the way it was being sold as definitely not being a risky thing to do. All we wanted to do was be able to pay our mortgage sum off. I will leave it to anyone else who reads this to decide whether or not my 'axe to grind' remark was valid, but I suspect your last post has perhaps made my case for me in that respect. I'm now leaving the forum due to your attitude, which is a pity, because I'm a huge fan of the website.

shortchanged_2

Always_Hopeful wrote: »

Interest only was all the advisor at the bank wanted to talk about.

You're actually contradicting yourself a bit because you say you are on a part repayment and part interest only mortgage.

Pixie5740

Always_Hopeful wrote: »

No, We did not take it out to get a 'little present at the end of it', all we thought we were doing was covering our mortgage, we were not interested in anything other than that. We were never told it might not cover it.

The endowment helped you out of a bind so it wasn't all bad.

Always_Hopeful wrote: »

NO, We were not given any option. Interest only was all the advisor at the bank wanted to talk about.

Advisers at the bank aren't there to offer you financial advice, they are there to sell you products. The only products they are familiar with are the ones their bank sells. If you ever need to re-mortgage go and see a whole of market broker.

Always_Hopeful wrote: »

NO, we were not aware it was a gamble. Call us naive, but as far as we were concerned we were being advised by the bank and trusted that we were being given the right advice. Don't forget that at the time we took out the mortgage people were not as aware as they are now of the interest only miss-selling that went on.

See above about the "advisers" at the bank. I don't think your interest only mortgage was mis-sold. You had a repayment vehicle but cashed that it and used the money for something else.

Always_Hopeful wrote: »

Also, JimmyTheWig, regarding ' no real difference between repayments and overpayments', yes there is, unless I am being really stupid, in that overpayments bring down the debt, thus saving interest, which can then in turn go towards paying off the interest only.

I agree with JimmyTheWig. Your over-payments on an interest only mortgage would work out about the same as payments on a repayment mortgage so if you can't afford one you won't be able to afford the other.

You've got 6 years to sort this out though so maybe sit down and do some number crunching to find out if you'll have a shortfall in 6 years time.