Secured Loan converted to unsecured

Unsecured&confused

A quick question for any legal minded peoples out there. If a lender allows you to sell a property which you have an existing secured loan on, but the house is in negative equity, so they allow you to 'convert' the remaining balance to an 'unsecured' loan (as there is no longer any property for it to be secured on), are they legally obliged to give you a new loan agreement? Surely the original terms no longer apply, as the loan is no longer secured?

[Deleted User]

Ideally, but it's enforceability wouldn't change. It just means that they no longer have the property as security.

Ask them if you feel you are missing some paperwork.

Unsecured&confused

Deleted_User wrote: »

Ideally, but it's enforceability wouldn't change. It just means that they no longer have the property as security.

Ask them if you feel you are missing some paperwork.

I'm not disputing the enforceability but if we moved house, we would need a new mortgage agreement? Doesn't the same apply to a second charge?

[Deleted User]

If you moved house and the lender didn't want to secure their charge on the new house, no.

Unsecured&confused

Our conveyancing solicitor requested that they do this, and they wouldn't. They wouldn't put anything in writing about our 'ongoing' agreement after the sale, and haven't provided a copy of our original agreement either when asked. What I don't get is, why not? Something seems a bit off here?

[Deleted User]

Poor admin is the usual explanation.

Unsecured&confused

But this can't be legal, surely? So they can do (or not do) what they want, and blame poor admin?

[Deleted User]

No, of course they can't do what they want. That would be mad.

Is the charge still registered on the property? If not, then that's fine.

Exactly what stage are you at? Have you sold the house or not?

Unsecured&confused

The house was sold in March 2015 and Idem removed their charge on it at that point. We have been making regular monthly repayments (interest free!) ever since. But are trying to find a light at the end of the tunnel and move on. We just don't feel we can trust them.

financegeek

can you try and be a bit more detailed in what you're trying to achieve?

the only people i can see that have lost out here are idem, as they can no longer take your house if you default on the arrangement. they would still need to stick to the original terms, they can't just suddenly vary this because their security has disappeared.

if you think you've overpaid them / they've added unfair charges etc then check your annual statements and send them a SAR request.

good luck

jonesMUFCforever

If you are asking can you stop paying - the answer is no - they could take you to court for a CCJ if you default.