Mortgage Meltdown

Buckstopshere

We applied for a self-build mortgage approx 4 years ago. It was approved after 7 months of too-in and fro-ing and we managed to exchange on 24th March 2012. Our paperwork states that it is a 20 year mortgage (at 6.5%). We have paid our instalment every month without fail and never late. In November 2014 the lender informed us that the mortgage was a three year mortgage (this was the first we new about this) but were willing to give us an additional 1 year if we paid for the indemnity insurance for that year. We have now been notified by Buildstore that the lender is "calling in the loan", the terminology they used. Is this possible? Can a lender do this? We have not had any communication from them other than three mortgage statements (over 3 years) and our receipts for payments in the mail every month. A couple of emails from them asking for copies of emails from us to Buildstore which we declined. We have reported them to the Financial Ombudsman but haven't even had a courtesy phone call from them. We suspect that (1) they want to sell our property at a loss and cash in the insurance, (2) are in some sort of legal bind over this type of mortgage or (3) that they just don't want us as customers.
We have spent a lot of time and money on architects fees, various specialists like structural engineers, wildlife surveys etc. We now have planning permission for extensive building works but it seems to no avail. We jumped through hoops to get the mortgage at a time when being self-employed and needing a self-build mortgage counted heavily against us.

The lender is a small building society with an annual profit of £500k to most recently £1m.

Any help or advice would be greatly appreciated.

Landofwood

20 year mortgage with a 3 year fix?

ACG

Buildstore are effectively a packager for newcastle building society and another lender I think.

I do not think they are in any financial trouble (but could be wrong), I can not see why they would want to cash in an insurance policy when they are a large reputable company.

Could it be that the build has not started and it should have?
Or could it be that its a commercial loan on a 3 year deal?

Have you got your paperwork relating to this mortgage and not a previous application by mistake?

You really need to find out why there is such a discrepancy in what you have and what you think you have. Best way to do this is with the lender as we are second guessing based on limited information.

Buckstopshere

We dealt with Buildstore from the start. There was never any mention about the 3 year term nor anything about indemnity insurance or additional visits by surveyors to assess progress. Nothing has been communicated with us at all. We have checked and rechecked. The lender has done nothing to communicate with us. At the very least they could have sent us a letter informing us of this. Our paperwork clearly states it is a 20 year mortgage. We assumed that once the building work was done that we could convert to a residential.

DandelionPatrol

Write to them and ask under which terms of the mortgage agreement they are calling the loan back in. Give them 21 days.

Then write a complaint unless they come back with a valid reason within the 21 days.

You have I think, jumped the gun by going to the FOS without having given them the opportunity to address a complaint.

Let_Us_See

I can understand Buildstore's concern if you have still not started your build project - after all that is why they offered the loan.

However, both the lender and borrower are bound by the T & Cs of the offer of mortgage, and I would very carefully check to make sure there is no criteria requiring the work to commence/complete within a certified time frame. I have processed many self-build mortgages, and all included quite specific time periods for construction, stage payments and site visits to monitor work.

Surprisingly you state "we now have planning permission." As this is always required before any mortgage can be agreed and funds released, I can't help feeling there are issues in the background that you have decided not to fully disclosed.

Buckstopshere

We are past the stage of writing to them. We had one call with one of their staff members who was unwilling to accept what we were saying and it was then that we realised that we were in danger of giving them a rope to hang ourselves with. Our "communication" with them has been through Buildstore. Three months ago they (the lender) sent us an email to ask us to pay £50k into the mortgage giving us 10 days. That was when we felt they were being unreasonable and reported them to the FOS. They have had every opportunity to explain their behaviour but haven't bothered.

Let_Us_See

Oh dear, this appears to be turning into a rant and I am unsure if you are seeking actual help and advice?

I will just reiterate my previous advice - check the terms and conditions of your mortgage offer.

Annisele

I hope you're not past the stage of writing to them - because if you are, court action is the next step.

There will be something in your mortgage T&Cs that says the lender can call in the loan under certain conditions. You need to check what those conditions are, and see if they've been met. If they haven't, write and say so. If they have, you're likely pretty stuck.

amnblog

Am I wrong here, or does your original post suggest that the 'self build' is not yet complete?

Let_Us_See

..............or building work has not yet started?