Advise needed urgently

Alyson17

Hi I Have recently finished paying off my mortgage with Barclays, the mortgage had a reserve account running alongside which I have used over the years, nowhere in any paperwork did it state that the reserve account had to be paid in full on the maturity of my mortgage. I thought once the mortgage was paid I had plenty of time to repay the reserve but Barclays have told me to keep my home I now to pay 1970.00 per month for 3 year , has anyone had the same problem and if so what was the outcome. I have managed to pay my first couple of months repayments but this has left me struggling for money.

amnblog

It sounds like your 'use over the years' amounted to > £50,000.


What is the property worth, and what is your current age?

Alyson17

The current amount is 62000 owing ant the property is worth 85000

amnblog

Sounds like the use of the reserve was not much less than your original mortgage size. An indication of why Barclays are pulling this arrangements from the market.


To pay over a longer term you will have to renegotiate a re-mortgage with Barclays or an alternate Lender.

TrickyDicky101

When you say you recently finished paying off your mortgage do you mean you reached the full term (say 25 years)?

If so, given the sum due to Barclays, you haven't really paid any of the mortgage off have you? You still owe 73% of the value of your property.

What were your plans to pay off this amount you have borrowed? Why did you borrow so much? You must have known it would need to be paid back.

Apologies if my post sounds harsh - I am trying to understand how this situation could have arisen.

Alyson17

Hi the money has Ben used over the years to particularly rebuild the house, yes I knew it had to be replayed but nothing in paperwork said it had to be repaid by maturity so I thought once the mortgage was finished I could repay about 1000 per month as I am only 48 and that gave me plenty of time to repay what I had borrowed.

minimike2

If you re-read your paperwork, you will indeed see that it is in your terms that the reserve is repayable in full at the end of the term of the mortgage.

As mentioned above, your options are:

1. Repay the balance.
2. Negotiate with Barclays for either a new mortgage or term to pay the reserve back (could be more difficult now the mortgage has matured)
3. Remortgage elsewhere.

Alyson17

The paperwork has been checked over by a number of people including a solicitor and nowhere does it state that the reserve must be repaid on maturity.Barclays themselves have admitted that the paperwork is transparent (there words) .The paperwork from myself and Barclays has been sent to the Ombudsman who is now investigating. I only asked on the forum if anyone else had been in this situation and what the outcome was.

Let_Us_See

Alyson17 wrote: »

the mortgage had a reserve account running alongside

Your very own words! Mortgage and reserve account go hand in hand. No mortgage, no reserve account facility. Fortunately, you are young enough to re-mortgage to an affordable monthly mortgage payment.

PS. If you spent most of the reserve account re-building your home, why is it only valued at £85,000?

getmore4less

What T&C is your mortgage using? (when did you get the mortgage)

I have a Barclays/Woolwich reserve from 2004 under 2001 edition conditions.

There reserve is under the Flexible Mortgage conditions(doc no. AD275 09/01)

Clear to me in those T&C's the account closes when the mortgage finishes.

Unless on a offset the rate on the reserve would have been at the SVR.

I had a quick look at the letter from Barclays for setting up the reserve account(07/2004) and that is far from clear on being attached to the Mortgage

using statements like "You can repay it as quickly or as slowly as you like"

Looking at the pre mortgage promotional material they don't mention the link to the mortgage just describing the reserve as an OD to paid when you like they don't say it is a secured OD.

edit: in another place is does say that if the mortgage is redeemed(eg. house sale) they won't remove the charge till the reserve is paid.

getmore4less

For those that don't know how the reserve works.

They could be set at up to 90% of the property value

The mortgage and reserve together were up to a limit.

As the mortgage got paid off the reserve got bigger.

If offset the reserve is at the same rate as the mortgage if not SVR.

There were a number of issues with these deals as not all borrowers understood them properly.

The main one being the combined effect was to make these deals close to interest only.

If the total available lending was on a repayment schedule they would have been better (ie. the reserve was only holding over payments).

There are probably still quite a few borrowers out there that will have issues although Barclays have been addressing some of the problems.