Barclays / Woolwich Mortgage Reserve Mess

Averagejoe

Hello fellow MSE fans I need some help before I drag my sorry self cap in hand to Barclays next week.

I have a Barclays / Woolwich Mortgage which we took out in 2007 at the height of the housing boom. The cost was £156,599.00 this was split in to a primary mortgage £98,558.00 on a variable and an additional account £58,041.00 the balance remaining is £75,982.33 and 45,374.04 respectively. We currently pay £468.63 per month based on the interest rate of 1.2%

The issue I have is we were provided with a mortgage reserve which has been used as a slush fun both in the good times and the bad. The problem is that it is currently sat at an eye watering £28,542.00 with monthly interest at £124.00 per month and I dont have any surplus to pay more than an extra 10 / 20 pounds a month. I have been advised that it is worth talking to Barclays to remortgage and roll this in to the main mortgage but I have no financial experience

You advice would be much appreciated

Average Joe

minimike2

It is possible for you to apply for funds to repay it, at a better rate, and then close the facility, meaning you will not be able to use it again. It would be a sub account to the mortgage, not all "rolled in" with the rest of it, as such.

Averagejoe

Hi minimike2

Unfortunately I am on a DMP paying unsecured debts so sourcing funds will be difficult.

Barclays have refused to close it they have just put a cap on it.

getmore4less

The main issue with the reserve is it is at base+4.49% not the mortgage rate, was never cheap borrowing.
(unless on an offset mortgage)

£28,542 @ 4.74% £113pm


Barclays have been sending out letters about the reserve for a few years now warning people and capping the reserve.

if you have been using the reserve and have other debt you have been living way beyond your income(that's with a seriously low mortgage rate) effectively paying the mortgage by borrowing.

rolling the reserve into the capital at the same rate

£75,982.33 and 45,374.04 respectively. We currently pay £468.63 per month based on the interest rate of 1.2%

£121360 @ 1.2% £469pm is 25years.
rolling up at same rate.
£149,900 @ 1.2% 25y £579pm

about the same as you are paying now.

What's in it for Barclays they just leave it as is till you can afford to start overpaying once out of the DMP


What's the rest of the debt look like?

minimike2

Have you actually made a full application to repay it with a further advance with Barclays?
As the debt is already there, it would seem a sensible option for all concerned to have it re-structured onto a repayment basis and off the reserve account. Unless the repayments are unaffordable?

Averagejoe

Thanks both for your replies. I have not made a formal application to Barclays yet as this will be done on the weekend to see what they will offer. So I wanted to get peoples thoughts on what options are available.

The unsecured debt is 30k on a stepchange DMP at £397.00 per month so 8 years remaining to complete.

getmore4less

Income and LTV may be sticking points

Thrugelmir

£20 a month may not be much but at least it's a start.

dee444

Averagejoe
Had you any luck with barclays I have the same problem as you state here
Any advice would be appreciated

chunkytfg

dee444 wrote: »

Averagejoe
Had you any luck with barclays I have the same problem as you state here
Any advice would be appreciated

They've not been online for over a year. Unlikely to respond

triplejs

It's been a couple of years since the last post on this topic but I have a different angle to the same issue. I couldn't afford the monthly interest repayments on my reserve account but was unable to get any agreement from Barclay's to readjust my repayments. As such, I stopped paying the interest over 4 years ago (and haven't paid anything since) in order to try and force their hand for a deal. Despite numerous letters in all that time threatening me with solicitors and court action, they've never actually done anything. I knew that there must have been an issue as to why they couldn't enforce the repayment of the reserve account or even the interest and I eventually stumbled across it. It turns out that this is to do with the original maximum agreed reserve limit on the original mortgage offer and Barclays then automatically increasing the limit every few months without any agreement to do so and without conducting an affordability test to see if you can afford the increased interest payments on the additional borrowing. I therefore advise anybody in the same situation to request a copy of your original mortgage offer from Barclays in order to see the maximum agreed reserve account limit and then ask the question as to what were the terms and conditions which had allowed Barclays to automatically increase that limit every few months without conducting an affordability test. Whilst paying more off your mortgage increased the equity on the reserve account, you shouldn't have been allowed to simply access that additional borrowing without Barclays checking your ability to afford the additional interest repayments every month. I believe that they are now fully aware of this glitch which is why all accounts were finally capped several years ago but have tried to cover it up in the hope that their customers simply repay the reserve account by the end of the mortgage term.