Birmingham Midshires Loan

Misteeq

Please can someone help me?

In January 2008 I took out a mortgage and an unsecured loan with Birmingham Midshires. The unsecured loan and mortgage repayments are combined into one monthly repayment.

I have now sold my house and the mortgage will be paid off in full. I am unable to settle the unsecured loan and took advice from Birmingham Midshires on what would happen to the unsecured loan. They wrote a letter stating that the unsecured loan would continue to run as per the agreement. However, the interest rate calculated would be based on the Bank of England Base Rate plus 8.00% plus 2.09%.

I called them yesterday to enquire how much my monthly repayments would be and at first they refused to tell me saying they were not at liberty to advise me. I complained and said that it was ridiculous that the actual lender couldn't tell me how much the monthly repayments would be. As I'd made a complaint the Manager called me today and said that they had made an exception and could release the information.

Well you can imagine my shock when I was told the monthly repayments would be £478.00 per month.

I owe £17,700. My loan statement confirms that I have 21 years left remaining. Based on the letter I received from them, I have calculated an interest rate of 10.59% over 252 months = approximately £179.00 per month.

I asked the Manager to explain how he had arrived at a figure of £478.00 and he refused and said that it was definitely correct. This means that over 21 years I will pay back around £120,000.00 for a £17,700 loan. The interest rate will be approximately 30%.

I now find myself in a situation where I will have to pull out of my house sale as I cannot afford to pay this back, plus a new mortgage and bills etc.

Could this be a mistake or are lenders allowed to treat people like this?

Please help as I am beside myself with worry over this.

Thank you.

Gaz83

What did your original T&Cs say when you took out the loan?

Misteeq

I'm not sure to be honest about the Terms and Conditions, but the letter I have confirms an interest rate of approximately 10.59%. Surely they can't charge over 30% interest can they?

[Deleted User]

You need to refer to your t&cs. Everything else is just guesswork.

jonesMUFCforever

What did you borrow in 2008?
What was the net sale price when you sold - was there any surplus to pay off the mortgage and this loan>?

sam2015_2

Did you get the mortgage and loan through broker? Could have been mis sold?

You will need the original offer letters and t&c.
Ask about early repayment fee to pay off the loan.
This higher loan repayment will have an effect on your future affordability for any mortgage or loan.

PeacefulWaters

It sounds to me like the term is being shortened.

It also sounds like any staff who have expertise in the workings of this product have long since left the company.

Make a note of each and every interaction you have with them. There's a big ex-gratia payment to be had further down the line.

Misteeq

Hi,

Thanks for your replies. I have just checked my Terms and Conditions and it states in the unsecured loan section that there will be no early repayment charges. If I repay the mortgage - which I intend to do as I've now sold the house - then it states that the interest rate will increase. This reflects the letter that they recently sent me that I am happy to accept (approx 10.59% interest rate). It does not state anywhere that they can reduce the current term left - which is 21 years.

Does anyone have any advice? I'm so worried about this as I've sold my house, but I can't afford to repay them £478.00 per month.

Thanks.

sam2015_2

Get everything in writing. Ask them to confirm the interest rate,term of the loan and any early repayment charge if you paid off your mortgage early.
Can you get another personal loan from them to considilate this? Bit like the credit cards transfer the balance transfer into personal loan just to keep the interest rate down.

Misteeq

Hi Sam 2015.

Thanks for your reply. Apart from the letter that I recently received about the increase in interest rate they have refused to put anything else in writing. When I spoke to the Manager yesterday he said that anything in writing would mean they are 'liable' and refused point blank.

I have thought about consolidation as I also have another loan which I owe £11,000.00 - so I need a personal loan of £29,000.00 which many lenders are not offering. My plan was to save another £4,000.00 and then take a personal loan of £25,000.00 as the rates are much better and I stand a better chance. I have no other debt - no credit or store cards etc and my car is paid for etc. I am planning to rent now that my house is sold. Paying back a loan is not a problem as I earn a fairly high wage and I have no dependants etc.

I just feel that Birmingham Midshires are being very unfair. They no longer offer this mortgage and unsecured loan option. The product was called a Mortgage Plus Account. I don't know how any lender can justify an interest rate of 30% when I have a letter stating 10.59%.

It also seems a bit strange that they will not commit to anything in writing.

I am thinking of complaining to the Financial Ombudsman. What do you think?

Thanks.

PeacefulWaters

Misteeq wrote: »

Hi Sam 2015.

Thanks for your reply. Apart from the letter that I recently received about the increase in interest rate they have refused to put anything else in writing. When I spoke to the Manager yesterday he said that anything in writing would mean they are 'liable' and refused point blank.

I have thought about consolidation as I also have another loan which I owe £11,000.00 - so I need a personal loan of £29,000.00 which many lenders are not offering. My plan was to save another £4,000.00 and then take a personal loan of £25,000.00 as the rates are much better and I stand a better chance. I have no other debt - no credit or store cards etc and my car is paid for etc. I am planning to rent now that my house is sold. Paying back a loan is not a problem as I earn a fairly high wage and I have no dependants etc.

I just feel that Birmingham Midshires are being very unfair. They no longer offer this mortgage and unsecured loan option. The product was called a Mortgage Plus Account. I don't know how any lender can justify an interest rate of 30% when I have a letter stating 10.59%.

It also seems a bit strange that they will not commit to anything in writing.

I am thinking of complaining to the Financial Ombudsman. What do you think?

Thanks.

Their failure to put it in writing seems totally unreasonable.

As such, you should go to the FOS if they continue to refuse to play ball. Make sure they know you're complaining.

Perhaps argue that the loan is unenforceable given their refusal. That's a long shot but it might help get them to act before the FOS agrees!