Mortgage Offer withdrawn 10 years on....

pdoherty78

Hello Everyone,

This is my first thread so please be gentle. I have a question about mortgages that concerns my elderly parents, who are both in their 70's and pensioners.

Just over 10 years ago my parents were mortgage free with a property worth at the time around £350k. They wanted to purchase a holiday home in Ireland without having to used up their savings so took out a £50k interest only mortgage, which equated to about £100 per month.

After 10+ years of paying this mortgage the building society contacted my dad to say they no longer offered this mortgage. They told him they were cancelling it and requested the money to be repaid.

My dad spoke to them and unfortunately he did not discuss this with anyone until now. He has agreed a new deal with the building society and now having to pay over £300 per month.

If he had signed into a fixed 15% mortgage repayment I am pretty sure they wouldn't be contacting him to offer a better rate. I understand that the deal is not longer offered, but surely they cannot have it both ways.

He is mid 70's and living off his pension so this extra expense is making a big dent and worrying him a great deal.

My question is basically can they do this?
Is there anything that we can do?

All feedback is greatly appreciated and thank you in advance for any assistance

Peter

Pixie5740

If your parents had an interest only mortgage what did they have in place to repay the capital at the end of the mortgage term?

Thrugelmir

pdoherty78 wrote: »

They wanted to purchase a holiday home in Ireland without having to used up their savings so took out a £50k interest only mortgage, which equated to about £100 per month.

After 10+ years of paying this mortgage the building society contacted my dad to say they no longer offered this mortgage. They told him they were cancelling it and requested the money to be repaid.

Sounds as the mortgage came to the end it's term. Therefore the money borrowed was repayable in full as the mortgage was advanced on an interest only basis. This is a contractual arrangement so no wrong doing on the lenders part. The question to be asked is how your parents intended to repay the money.

Selling the property in Eire or downsizing the family home seem the most appropriate courses of action to be considered.

Goldiegirl

When an interest only mortgage comes to an end, the lender will expect the mortgage to be repaid in full.

Actually, it appears they have been decent about this, and haven't insisted on immediate repayment, but have allowed your parents to clear the mortgage over a period of time. This is probably why the monthly payment has gone up, as capital and interest is now being repaid.

If your parents feel the monthly payments are causing a big dent in the budget, then the simple answer is to sell the holiday home.

A holiday home is a nice to have, not an essential. If it's not affordable, then the sensible solution is to get rid of it. Why pay for a luxury they can't afford?

MARTYM8`

It may not all be bad news.

I inherited a property in Ireland in 2005 – it has fallen by more than 50% in value since then (don’t mind – it’s a holiday home). So it may be easier for them to pay off the principle?

Depends of course where in Ireland it is – in Dublin prices have rocketed since 2011 but in many rural counties are still well below 2008 levels.

Voyager2002

MARTYM8` wrote: »

It may not all be bad news.

I inherited a property in Ireland in 2005 – it has fallen by more than 50% in value since then (don’t mind – it’s a holiday home). So it may be easier for them to pay off the principle?

Depends of course where in Ireland it is – in Dublin prices have rocketed since 2011 but in many rural counties are still well below 2008 levels.

Except that the amount they owe is based on the amount they borrowed, and the current market value of the property is completely irrelevant.

silvercar

Voyager2002 wrote: »

Except that the amount they owe is based on the amount they borrowed, and the current market value of the property is completely irrelevant.

Not irrelevant if they sell up. They will have more money in their pocket.