Advice wanted because I consider this is theft!

Thrugelmir

Brock_and_Roll wrote: »

The early repayment charge of £46k is basically what us bankers call broken funding costs - the amount the bank in theory would have to pay to the money markets to "break" the interest rate swap agreement that they took out at the time. As of course interest rates have fallen massively, the money market lenders to the bank could not achieve anywhere near the same return if they receive the money back early - hence the charge.


I suspect it is highly unlikely that the bank entered into a 15 year +fixed funding arrangements so we are talking theoretical breakage costs here......so might be a basis for some pleading here even if technically on the hook for this.

Aviva (Norwich Union) isn't a bank. There's a reasonable certainty that they would have (\ still do) protected their lending margin though. By using a financial instrument of some sorts.

amnblog

The property is now worth?

Tabbytabitha

amnblog wrote: »

The property is now worth?

The crucial question.

AnotherJoe

How does the Early Settlement Charge work? Is this a fixed length contract, say 20 years or some such?

calleyw

amnblog wrote: »

The property is now worth?

According to the op

- contacted Norwich Union to find out loan situation. The original £60,000 loan against a property value of £250,000 now stands at £174,077 (interest has been charged at £34.76p PER DAY).

Yours


Calley X

John-K_3

Ian_J_Alexander wrote: »

Very briefly the situation/facts are as follows:
- 2001 my farther declared himself bankrupt due to some unfortunate business decisions
- 2002 to clear off debts parents sold the family home
- 2002 with the remaining equity from the sale of their home they moved to a smaller property with a small mortgage of £10k
- 2003 parents wanted to release some equity from their property and applied to the Norwich Union for an Equity Release Loan
- The loan agreed was for £60,000 against their property value of £250,000 (with a mortgage of £10,000)
- 15 years on my mother (now 84) is expressing an interest to move to a smaller more manageable home (father died 6 years ago)
- contacted Norwich Union to find out loan situation. The original £60,000 loan against a property value of £250,000 now stands at £174,077 (interest has been charged at £34.76p PER DAY).
- If my mother decided to sell her property Norwich Union will apply an early settlement charge of £46,280. THIS MEANS THE ORIGINAL LOAN OF £60K NOW STANDS AT £220,257!!
- SURELY THIS IS A CLASSIC CASE OF GROSS MISS SELLING AND OUTRIGHT THEFT!
Advice on how to address this corrupt situation would be appreciated.

I am. It following. It looks like they took out a lifetime mortgage, and have paid nothing off for decades. How do you think it is supposed to work; the bank lends tens of thousands, gets nothing back for decades, and only the original amount at the end? Why would they lend on this basis?

It looks as though the loan has been rolling up at 6-7%, which while not cheap is not crazy either.

Borrowing £60,000, spending it, and. It paying it back for fifteen years is going to be expensive, especially for an ex-bankrupt.

I am curious, what did the £60k get spent on?

dunstonh

calleyw wrote: »

According to the op

- contacted Norwich Union to find out loan situation. The original £60,000 loan against a property value of £250,000 now stands at £174,077 (interest has been charged at £34.76p PER DAY).

Yours


Calley X

That doesnt mention the current value. It mentions the original equity release and the original property value. However, it only gives the debt value now.

£250k in 2003 is probably around £650k-£750k today depending on the area.