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Mis-sold NatWest Offset Interest Only Mortgage - Advice needed



  • silvercarsilvercar Forumite, Ambassador
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    If the flat is rented out then the obvious way to clear the mortgage is to sell the property.

    if you now move the mortgage to a different lender, you will be looking at BTL mortgages, for which selling up is an acceptable repayment method.

    alternatively, you could look to move to repayment. On a current mortgage you have until 2040. You could choose to pay into the offset a set amount each month to go towards clearing the mortgage.

    if you are in negative equity then it will be hard to remortgage, so you would need to use some savings to reduce the borrowing.
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  • AnniseleAnnisele Forumite
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    Mido74 said:
    What is evident though is that there is no plan to pay this debt back and i am petrified about what is going to happen next.
    Can you explain a bit more about why you're petrified? It does sound as though there were some irregularities here, but (from what you've said so far) I'm also not particularly seeing that any harm has been done.
    It doesn't sound as though either of you live in this flat, so having to sell it in order to repay the mortgage wouldn't on the face of it be a terrible thing. It's quite common for buy-to-let landlards to deliberately plan to take out an interest only mortgage, with the intention of either extending the mortgage at the end of the term or just selling the property. Sale of property is a perfectly normal repayment method for a BTL. (That's a bit trickier with a mortgage on the home you live in; where are you going to live after you've sold up?)
    The original sale might not be too awful either (though the life assurance term issue is odd). Borrower had recently split with partner, possibly money was tight, and ended up with an interest only loan over a 35 year term that enabled them to stay in their home. In the short term that might have been an entirely sensible thing to do. Not necessarily the best thing to keep things that way forever, but given that your partner already owned the home and (apparently) wanted to keep it, what he did might have been his least worst option.
    I am a bit surprised that a property bought prior to 2005 is in negative equity. There are a few parts of the country where that might be the case, but in most of the UK prices have gone up quite a bit since then. Is there any chance your partner took any further advances since 2005?

  • ACGACG Forumite
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    tacpot12 said:
    I think it more likely that they would expect that NatWest offer him favourable terms to repay the capital, e.g. zero % interest and the maximum time to pay, e.g. up to his expected retirement date. I think this is what I would be pushing for.
    I suppose that is more likely than them being told to write the debt off, but realistically I cant see that happening either. 

    How much is the negative equity? If it is not a huge amount, they might allow you to sell the property and let you pay £x per month to clear the difference. Obviously if it is £100k they are unlikely to do that, if it is £5-10k then they might. 
    I am a Mortgage Adviser
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  • dunstonhdunstonh Forumite
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    There may have been an endowment policy at the outset.   Splitting up with a partner usually results in the policy being cancelled/surrendered

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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