I am in a pickle

Sharni07

I wish I could offer you a solution you really are in a pickle. 

Why are you still being charged all the interest and fees?? Surely that shouldn’t be on you as ROMA are the ones who pulled out? 

I’d definitely seek some legal advice.
sounds to me like you are financially secure with a good income minus this house & bridging loan. 

The fees and interest should be frozen.

id get some legal advice and save as much money as you can while you wait. If you have £1700 left each month I’d be putting at least 1k a month away in a separate account. 

I hope you find a solution soon. Good luck. 

FoolishChris

Thank you for the comments. 

Yes the one thing I would be happy with would be if the interest and charges stopped, as this would allow time for the property to sell at a sensible price.

I did seek legal advice, but I was told there was nothing I could do. The pulling out of the deal by ROMA is perfectly legal and above board, as the initial 12 months of the deal had elapsed. It was completely at their discretion whether they would extend the term or not. But the shelling of fees and increase of interest rate was a shock to say the least, but appears to have been burred in their complicated terms and conditions. I think of myself as an intelligent person, but having read the terms and conditions over and over I still can't make head nor tail of them.

I think the issue is that under the contract my wife and I are personally liable for the debt if the business cannot pay it. This is standard in bridging loans, as lenders can't take the chance of someone winding a business up to avoid the debt; especially a brand new business like ours. But it does seem very unfair that they can decide they want out and fleece us for as much as they can. It still boggles my mind that the debt grew from £65,000 + £10,000 interest for the year, to a whopping £100,000 in just a couple of months. Then they are adding £3,500 each month too. If the property takes another 6 months to sell I'll owe another £20,000 and assuming they sell the property off cheap I could end up owing them more than they leant me despite them taking a property that more than covered their original debt.

So given what a few of you have said, I am now thinking I need to find a forum with legal advice. I'll see what I can find.

MEM62

Sorry to hear of your circumstances.  It is correct that, if the original agreement was for 12 months, Roma were under no obligation to extend the arrangement.  (Unless, of course, that was written into the agreement)  Did you have any background in this area before starting the business?  Bridging loans are, by their very nature, expensive and only supposed to be for short terms.  The contract should be clear on what your obligations are, what then lenders are and what charges are applicable.  As soon as the original contract came to an end and they recalled their money, you were going to get hit with additional charges / costs by not repaying.  By all means spend a little with a solicitor so that he can explain the T's and C's to you in layman's terms but any money that you throw at challenging the agreement is unlikely to be well spent.  You need to offload the property as quickly as you can in any way that you can.  This is damage limitation.  Hope you manage to get it sorted before you are in too big a hole.                   

FoolishChris

Yes I agree, the nature of a bridging loan is intended short term, and I agree they were under no obligation to extend. It is obviously annoying they did not tell me this was likely, or explain what might happen back in September when we discussed an extension,; but hey again I accept they are not obliged to be overly helpful either.

All I want is some way to limit the damage. I am already trying myself to find a way to sell the property, but it might take time and it seems unfair they are allowed to continue charging me 3x the costs of that which they would earn from a normal bridging loan.

I also accept its all in the T&Cs, but they are perfectly unfathomable to the average person. If your average bank did this to a private person they would never get away with it, but since its a business deal it seems anything goes.

MEM62

FoolishChris said:

All I want is some way to limit the damage. I am already trying myself to find a way to sell the property, but it might take time and it seems unfair they are allowed to continue charging me 3x the costs of that which they would earn from a normal bridging loan.

The additional costs will be partially punitive because they have, in simple terms, asked for their money back and you have not repaid it.  

FoolishChris said:

I also accept its all in the T&Cs, but they are perfectly unfathomable to the average person. If your average bank did this to a private person they would never get away with it, but since its a business deal it seems anything goes.

There is a vast difference in the protections afforded to a private individual compared to those offered to a company or business.  A company is considered to have expertise and also do do due diligence in checking any contract or arrangement that it enters into. The mitigation of " I didn't know" or "It wasn't made clear to me " would not hold water.  A clear and full understanding of the contract is the expectation.   

FoolishChris

Something did occur to me today which might help. I noticed that the interest is staying the same regardless of the total. So I assume it is only being charged on the £65,000 borrowed and not the sum total including the fees.

So in that case it makes me wonder, if I was able to raise part or all of the borrowed £65,000 now, would that substantially reduce, or maybe entirely stop further interest payments? - just leaving the remaining interest and fees left to pay at a fixed amount.

Then perhaps the total would stop growing while the property is sold.

Do you think that might be the case?

enthusiasticsaver

Surely if the debt is done through a business they cannot come after your home?  You did not put that up as security did you? Honestly it sounds like chucking good money after bad to borrow another £100k.