proof to pay off interest only mortgage

signalyellow

Hi everyone

a newbie here
just received an innocent looking letter from my lender advising about the importance of having a means to pay off an interest only mortgage - very good advice.
But the back is not so innocent it says ......that every so often we will ask you to provide up to date details of your repayment plan. If you are unable to satisfy us that your repayment plan remains on track to repay everything you owe, we may ask you to transfer some or all of your mortgage onto repayment

So I have a plan to pay off - ISAs etc, and at current rate done in 5-7 years - the tracker I am on goes beyond this time but what criteria are they working too - they can set the bar so high everyone falls short and in effect have to switch to repayment. Plus legally can they introduce this when the value of the property is 50% more than the mortgage?


comments welcome folks and sorry if I am flagging old news :j

HappyMJ

signalyellow wrote: »

Hi everyone

a newbie here
just received an innocent looking letter from my lender advising about the importance of having a means to pay off an interest only mortgage - very good advice.
But the back is not so innocent it says ......that every so often we will ask you to provide up to date details of your repayment plan. If you are unable to satisfy us that your repayment plan remains on track to repay everything you owe, we may ask you to transfer some or all of your mortgage onto repayment

So I have a plan to pay off - ISAs etc, and at current rate done in 5-7 years - the tracker I am on goes beyond this time but what criteria are they working too - they can set the bar so high everyone falls short and in effect have to switch to repayment. Plus legally can they introduce this when the value of the property is 50% more than the mortgage?


comments welcome folks and sorry if I am flagging old news :j

Old news really.

Send them your ISA statements. At least you have a plan.

TrickyDicky101

I'm clearly not as accommodating as MJ (or as happy, no doubt ).

They can ask you to move to repayment but they cannot force you to.

I would ignore.

signalyellow

yeah I wasn't planning on contacting them but jsut a concern about what is enough to satisfy and if anyone had been asked to provide this and what the experience was like - do they know what they consider as adequate

Thrugelmir

The letter isn't personal to you but generic. Lenders are writing to all customers on a regular basis at the request of the FCA. No opportunity for claims against lenders as a result. As plenty of warning has been given.

There's few investments that guarantee to earn a rate of interest higher than most people pay on their mortgages. Even if you are. Longer term this may well disappear as normality returns.

For majority of people a repayment mortgage is the best option as both provides a focus and provides the necessary discipline.

Lenders could penalise those that don't bother to respond. As ultimately these are the customers that may cost them time and money.

myfairlady

Hi all, I'm jumping on this thread because I too have had a letter. I ignored the first (forgot about it) and they have chased up. Has anyone experienced any negative actions for those not responding?

Am i under an obligation to respond and declare my savings and investments etc?

The way I look at it, if my repayment plan doesn't work out I'll sell the house to pay the mortgage off. However I really don't want them to switch me onto a repayment mortgage at this stage because my mortgage deal is really good right now.

If anyone can offer any help I'd really appreciate it. I guess I'm on their radar now because they've sent two?

Thank you so much, have a great day.

amnblog

You take your mortgage based on the criteria requirked by the Lender at the time.

This is all typical PMA work from Lenders. They cannot ask you to meet today's criteria 'or else'. In all probability they only have the staff to engage with those that respond. The rest will probably get a letter once a year.

dunstonh

Plus legally can they introduce this when the value of the property is 50% more than the mortgage?

Yes they can.

The lender has the right to do a number of things if it believes you have no plan for repayment. In many cases, where the amount is not significant, they will do nothing other than continue to issue warnings which prevents you from complaining on redemption that you didnt know. However, worst case scenario is that they can go for repossession. They can also switch you to repayment basis.

Am i under an obligation to respond and declare my savings and investments etc?

You would have agreed to it when you bought the mortgage.

myfairlady

Amnblog and dunstonh, thank you for your prompt replies.

Amnblog, have you experienced anyone being negatively impacted for not responding to the letters?

Thanks again all!

amnblog

To date I have not heard of Lenders doing anything about anything other than protecting themselves and their profits.

myfairlady

Good answer Thanks, have a great day.