Agricultural Mortgage help require

PaulCooper

Hi
I'm looking for some pointers as to where to take a problem for a neighbour of ours. She is recently bereaved, whilst trying to sort out the business affairs (farming business), she finds out that her husband had taken out a 40 year mortgage, approximately 20 years ago when he was 45. Obviously circumstances have now changed. The specialist Agricultural Mortgage, provided by a Company, still has 20 years to run and there is a £200K early redemption charge (loan £500k). The interest rate payable is also somewhat extortionate, but that's really a separate issue.
Where should she start with trying to get the early redemption charge removed? Obviously the easiest place to start is with a complaint to the CEO, but there must be other avenues to stir this up quickly
Thanks for any thoughts
Paul

davidmcn

What would the grounds for a complaint be? Who advised him at the time he took out the mortgage? Probably not the CEO of the lender!

PaulCooper

Just to give this another few hours on the front page.
To be clear, it's the scale of the early redemption penalty that may be inappropriate
Paul

davidmcn

Things you'll need to work out:

• who advised him
• whether it was actually a bad deal at the time (what else was available, bearing in mind that this is a higher risk sector than residential mortgages)
• what his rights would have been (commercial lending is less regulated than residential)
• whether he would have been out of time to complain anyway

Others here are better versed than I am in the complaint rules.

PaulCooper

Thanks for that, I'll have to try and dig a bit deeper into this, but obviously the trail has gone a little cold due to the bereavement
Paul

observations_from_a_hill

Was he a member of NFU? If so, they will be able to advise as to whether or not the deal was reasonable at the time (and may give some assistance even if he wasn't a member).

Was he a long-term farmer who had either inherited the family farm or decided to strike out on his own - or was he an aspirational hobby-farmer who made this deal to finance his purchase of the farm? Serious farmers tend to be very much aware of financial implications, newbies perhaps more naive.

PaulCooper

Thanks for that, I don't know about the NFU, but I'll find out. On the question of naivety, probably the later, he spent most of his working life overseas before returning and buying land
Thanks
Paul

observations_from_a_hill

As it was business-to-business lending, there is nothing much that can be done. The only hope for the widow would be to show that the ERC was unconscionable, which is hard to do after 20 years of living with it. As said, NFU may be able to advise; as too could an estate agent (meaning an agent who does estate management).

The farm has obviously managed to pay the mortgage for 20 years. Maybe all that is needed now is to appoint a manager to run it until the mortgage is discharged.

silvercar

Was she living in the farm when the mortgage was taken out? Was she made aware?

I know of someone who only in bereavement found that her deceased husband had taken out a business loan secured on their home without her knowledge or consent. It took a year and a lot of legal wrangling, but eventually the loan became unsecured as it had been put as a charge on the house without the widow's knowledge.