Long story in short...

SparkySimon

Okay will try to explain this as best I can...

I took out a mortgage 7 years ago and also took a draw down loan, unsecured, with the same lender.

I messed them about alot, lots of late payments. Eventually it got to the stage where I defaulted on the draw down loan and the courts secured the loan to the house.

I finally got up to date with all the payments and was paying regularly. I was receiving statements from my lender showing my outstanding balance of mortgage and draw down loan. My statements did not show any interest for my draw down loan, only for the mortgage. My payments showed both my mortgage and draw down loan decreasing as expected.

2 Years ago I wanted to move. I requested a settlement figure for mortgage and draw down loan and was supprised to receive a figure over 3k higher then my statements had been indicating.

I contacted the lender to find out why and was told they had charged me 8% on the draw down loan. When I asked why I was told that they were allowed to because of the the default, the rate was a figure decided by the courts.

I questioned this further as I was never notified of this and was sent a copy of the court order that seemed to be something that was sent to the lender.

I did some calculations and at the 8% I was to be charged I was horified to find that if I had stayed with this lender for the full term on the mortgage I would have ended up owing more than I had borrowed on the draw down loan, I borrowed 15k over the 25years.

The lender told me that my statements would not show this 8% as it would be added at the end of the term, i.e. in another 20 years time.

I also noticed that the letter to the lender from the courts only mentioned that the lender "may" charge the 8% and does not say they will or should.

I am so relieved that I decided to move house and so came across this problem sooner rather than later.

I know I was a fool for messing the lender about in the first place, was my first mortgage and I did tend to just not worry about it. But I never stopped paying and as I said, I did get all my payments up to date.

I guess I was very naieve in not questioning the interest not appearing on my statements for the draw down loan after I defaulted on it. I assumed wrongly that the courts had frozen the interest on the loan as a side effect of changing from unsecured to secured, at the time I just thought "cool" I have bad credit history now but I don't have to pay the interest! "muppet"

Despite all this I really feel let down by the lender, I would have thought that as my mortgage and draw down loan where covered by the consumer credit act that I should have be made aware of the changes, perhaps it is a legal requirement under the consumer credit act?

Anyway, I moved house, all though I had to go back to the new lender and ask for more as I no longer had enough to buy the new house, which in turn ment I had to choose a different lender than I had first appoached as they were not prepared to offer any more. Which in turn cost me with a higher rate.

So I am happy now in my new home, and have learnt my lesson and never missed a payment in 2 years now.

I did write to the old lender and told them I was prepared to take them to court for the difference and although they refused they did send me a figure of around 1k, they said their accountants had made an error in the calculations, they did ask me to sign a letter saying that the matter was now closed. I took the money and wrote back saying I was taking the accepting the payment as part payment of the figure I was intending to claim.

Soooo, is there any point in continuing with the claim through the courts? The figure is low enough to claim through the small claims court.

Your thoughts please people? Which I am sure will include a few "You screwed up, stop trying to rob your lender"

Regards, Simon

homer_j_3

If they have said that there is 1k in full and final settlement and you cashed it then thats your acceptance, if you wanted to pursue the claim, I would have thought that you should have returned the cheque and stated that you did not accept it.

Can you prove any further liability or are you doing it for the chance that they may offer more?

Personally, I would be asking a solicitor these questions rather than a public forum.

SparkySimon

The cheque for the 1k was because their accountants had calculated the 8% on all the loan from the day it began and not from the date of the default. I had already been paying interest on the loan until that time. So the 1k was unquestionably mine and had I not began persuing the money I probably would never have seen it.

The remainder is debateable of course. Can I prove further liabilty? All I can prove is I was never notified of any change in my contract with regard to interest being charged. I can prove this because the lender is unable to provide me with any copies of letters informing me that this was going to happen, there was also no advice that if I continued paying the monthly demands that I would in fact end up owing over £15k at the end of my mortgage in another 20 years and that I should consider increasing my payments to cover the 8% that the lender was going to apply at the end.

Why have I posted on a public forum? Because it's free, because others may be in the same situation and unaware of what is happening, because public opinion is a good starting point when deciding what to do next and lastly because this may have happened to someone else before who can offer me some advice.

Regards, Simon

homer_j_3

I think you have missed my point and its probably my lack of explanation that is at fault.

You are asking members of a public forum about complex legal contracts that to be fair, not many will be in a position to confidently talk about.

Your situation will not be as straight forward as you have stated as there will be things that won't have been considered. Therefore responding from the brief statements you have put would not be sufficient to get an accurate response.

Also. If I had lent you money and realised that I had mischarged you and offered you £10 back in full and final settlement. The cashing of this cheque would, as far as I am aware, mean that you have accepted that this is all that you are due. If you were to respond back to me and say "Thank you very much for the £10, but I do not accept", it won't change the fact that you have accepted full and final settlement and released me of any further liability surrounding that particular claim.

If you have a separate claim then maybe you will be able to argue this but once again, it is very difficult to see from the info you have given. Maybe you may want to take all your paperwork to the Citezens Advice as an alternative where someone can look at all the paperwork and make relevant suggestions?