End of mortgage term last year (August 2024) but bank didn't contact me before now - can't pay total

tifo

Hi

My interest only mortgage term ended in August last year (2024) and the bank didn't contact me until now. They didn't contact me before that.

I've been in arrears for several years and in an arrangement to pay these off plus my monthly instalments. I went into arrears due to ill health and being unable to work since end of 2018.

I've received a letter from the bank saying that the Capital hasn't been repaid and they will send an agent to ask why or/and to make a payment arrangement. The charge will be £183.

Several weeks ago I received a letter from the bank's solicitors saying the Arrears need to be repaid in full or make a payment arrangement. I've been talking with them since then.

I assumed the solicitors were dealing with the whole account as they've done previously (they took it to court in Feb 2020). But it seems they're dealing with the arrears and the bank with the capital. In the past when solicitors are involved the bank referred me to them.

I know the mortgage term ended in August 2024 and as I was unable to remortgage due to arrears (I didn't try as the bank has been destroying my credit score by reporting 6+ months missed payments even tough i've been in a payment arrangement, having taken it to the Ombudsman the bank said they report the arrears not the payments). As the bank didn't contact me and payments carried on as normal, I assumed they'd extended the mortgage term. I've been on follow on / SVR rate for many years. The only letters i've received from the bank for many years are an arrears statement every month and interest rate changes when they fall or rise.

Mortgage is around £60,000, arrears are near £10,000 and house value is approx £280,000.

Advice welcome.

Thanks

Hoenir

What's your plan?  The end of the mortgage term was always going to require the repayment of the original mortgage advance.  This is your responsibility to deal with. Not the lenders problem. 

Emmia

So you're going to need to sell,  pay the capital and arrears you owe and buy somewhere with the equity you have left.

What was your original plan for paying the capital off at the end of the I/O period?


What outcome do you (realistically) want?

Mark_d

You need to pay back the £60k mortgage amount plus the £10k arrears as soon as possible.

You must have had a plan to repay the £60k in August 2024.  Perhaps you have an investment portfolio,  maybe in an ISA?  I don't know how much this investment vehicle is now worth?

Perhaps you are able to retire soon and use the tax free lump sum from your pension to repay your debts?

If you can't repay your debts then your only option is to sell the house, repay the debts, and then buy somewhere cheaper to live.

housebuyer143

I'm not sure what you want advice on. You have no means to pay off the loan so you need to sell ASAP. 

Admiral_Barbarossa

Trading through previous post, OP needs help to look into their financial dealings over the years. The mortgage has been in arrears since June 2012, yet they continued to spend without any plan to pay off the debt. A new 71 plate car in 2021 is part of the problems. 

OP needs debt advice. 

MWT

tifo said:

I know the mortgage term ended in August 2024 and as I was unable to remortgage due to arrears (I didn't try as the bank has been destroying my credit score by reporting 6+ months missed payments even tough i've been in a payment arrangement, having taken it to the Ombudsman the bank said they report the arrears not the payments). As the bank didn't contact me and payments carried on as normal, I assumed they'd extended the mortgage term. I've been on follow on / SVR rate for many years. The only letters i've received from the bank for many years are an arrears statement every month and interest rate changes when they fall or rise.

Difficult as this is, you need to get past wasting time blaming the bank for the assumptions you've been making.

You knew the loan was repayable in full at the end of the term and that payment is now well overdue.

Fortunately you do have plenty of equity in the house so you have options but you need help to review the options.

I would suggest you call StepChange and see what help they can offer you, but in all probability, unless you are old enough to consider a Lifetime Mortgage product (55+) you are going to have to get started on selling the property. Even if you are over 55 you would probably need to be more like 60+ to be able to take enough out to cover the amount you need...

tifo

Admiral_Barbarossa said:

A new 71 plate car in 2021 is part of the problems. 

That was a company car paid for by the business.

Emmia

tifo said:

Admiral_Barbarossa said:

A new 71 plate car in 2021 is part of the problems. 

That was a company car paid for by the business.

It doesn't get away from the basic fact that you took out an interest only mortgage with apparently no plan for repaying the capital.... And you're become a little unstuck as a result

ayupmeduck

the bank have been recording your payments as missed and 'damaging' you score as you are in arrears and therefore not paying the original amount, you are in a payment arrangement, that is how it works. 

enthusiasticsaver

Unfortunately these interest only mortgages are still going on but should be only temporary.  Given you presumably are still in ill health and unable to work and don't seem to be able to cover the interest let alone the capital repayments I cannot see any alternative but to sell up and downsize.