Interest Only Mortgage worry

jcorbygas

We took out a self cert interest only mortgage with Birmingham Midshires which is due to come to an end in 2022. We have no policies in place to pay back the principal amount and are well aware and have planned for the fact that we will be selling the house to pay back the mortgage. We were hoping to be able to wait until 2021 to do so. However, we received a letter from BM wanting details of how we are proposing to pay off the mortgage. I am assuming that they have been told to do this due to some misselling of interest only mortgages, and am well aware that they have every right in the terms of the mortgage to ask for the money back at any time.
I will be writing to them to explain that we will be selling the property (unless we win the lottery and can pay them back!)and will be sending them 2 estate agent valuations to prove that there will be enough funds on the sale of the house to pay the amount but was wondering whether they will accept this or want us to sell straight away. The mortgage is large and we could not afford to put it on a repayment basis. Anyone have any thoughts of what they might do?

Typhoon2000

There is no obligation to reply to the letter. I think banks are obliged to send them out as part of their responsibilities to those with Interst only mortgages. There is no action they can take between now and when the full repayment of money lent is due.

jcorbygas

I was going to leave it a few weeks before replying anyway and see if they were going to chase it up. I have had letters in the past which I ignored but this one wants a lot more details ie copies of documents relating to policies so this is why I was worried about this one.

AnotherJoe

Typhoon2000 wrote: »

There is no obligation to reply to the letter. I think banks are obliged to send them out as part of their responsibilities to those with Interst only mortgages. There is no action they can take between now and when the full repayment of money lent is due.

Surely if the mortgage Ts&Cs state, as the OP has said, that BM can ask for the money back at any time (which doesn't sound right to me but that's what they've written) they ought to reply?

brit1234

Why not reply if you have nothing to hide and complied with the mortgage conditions. It is better to sort this out rather than have the bank do a margin call and reposes the property.

Thrugelmir

Lenders are only acting at the request of the FCA and in the process covering their backsides. By issuing the letters borrowers cannot say that they weren't warned. Also it enables people to potentially reschedule their mortgages over a longer term while switching them onto a repayment basis. Lender have a duty of care to assist. First borrowers have to help themselves.

jcorbygas

Thank you - I have subsequently found the FCA advice to lenders and BM are obviously carrying their advice/demands out.