end of term dilemma

euge595

I have an interest only mortgage £130,000 it is made up of four sub accounts 69k,15k, 24k and 22k all were due to end in 2020. My house is worth approx £400,000 my intention has always been to downsize in 2019 to clear the balance. Due to an administrative error the end of term for the 69k and 15k were not adjusted and are due to end later this year. My lender wants me to switch the full amount £130,000 to a repayment mortgage, as I'm 63 the longest repayment term would be 12 years which means my monthly repayments will be around £1,200 which I can't afford. If I simply tell my lender that I can't afford to switch what are there options or likely action, they have agreed that the wording of the original offer letter was a bit ambiguous, but are refusing to simply line up the end of term dates. I've been with them for 20 years and have never missed a payment.

silvercar

You could start by making a complaint.

If the error was their fault, they should be correcting or at least putting you back in the position you would have been had the mistake not been made. Probably the same thing in this case.

The next best situation is that they put the 69k and 15k onto a repayment and leave the other 2 interest only. Would that be affordable?

euge595

I have made a complaint, and went to the ombudsman, who accepted that the original intention was that the terms should finish together, but also said they did not have the power to force the Leander to comply. The Leander is not accepting responsibility for the error and won't let me move part of the total amount as you've suggested.

getmore4less

if it is not affordable then the lender will have to come up with another solution.

You could start the downsize process now along side the complaint.

leaving it to 2019 was always a bit risky anyway it could take some time.

some lenders will let the mortgage continue if trying to sell

clairebeth

If you do have to move to repayment, is there any reason you need to stay with the current lender? Could you go with a lender that might allow a slightly longer term? If the £22k and £24k are not due to end, you can leave them with the current lender and perhaps borrow £84k from another lender? Just a thought, but not sure if possible!

euge595

If I agree to put my house on the market now, is there any other action they can take for example additional charges similar to an un-arranged overdraft fee

euge595

I don't have to stay with the current lender, but there aren't any that I've found that will lend beyond the age of 75, and borrowing the £84k from another lender would require a second mortgage I assume and I'm not sure how accessible they are these days.

dimbo61

Why not start to overpay the most expensive part of the mortgage now !
Whichever part has the highest interest rate.
Even £500 a month will knock a couple of thousand off by the end of the year.
As long as the lender and the ombubsman can see you are trying to repay the debt it will make it harder to repossess the property or give you time to sell

euge595

I'm more interested in what action they can or may take If I simply tell them I can't afford to convert the full mortgage to repayment

getmore4less

they have to do affordability checks,
if unaffordable they can't go down that route

Thrugelmir

euge595 wrote: »

I have made a complaint, and went to the ombudsman, who accepted that the original intention was that the terms should finish together, but also said they did not have the power to force the Leander to comply. The Leander is not accepting responsibility for the error and won't let me move part of the total amount as you've suggested.

One assumes that whatever the intention you agreed and signed the offer made. So the fault is shared between you and the lender.