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  • FIRST POST
    • whits end lass
    • By whits end lass 9th May 18, 4:04 PM
    • 10Posts
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    whits end lass
    Smi/interest only mortgage
    • #1
    • 9th May 18, 4:04 PM
    Smi/interest only mortgage 9th May 18 at 4:04 PM
    20 years ago, when times were good, and both myself and my husband were working full time, we decided to buy a do upper 2 bedroom bungalow to live in . We had a regular repayment mortgage at the time. However a few years later, we took out a remortgage to carry our serious repairs that needed doing in the property. The broker at the time said that we should do an Interest only Mortgage and carry out an ISA alongside for when the term of the mortgage ended. As fate would have it, my husband fell ill with a Parkinson's related disease, and had to stop work as a result. I still worked full time whilst looking after him, to maintain the mortgage payments and bills. However his illness got worse, and a s a result I had to stop working to and become his carer.
    The recent changes in the DWP house/mortgage payments, as a Loan, is fundamentally a major ticking time bomb
    We have four years to run on our mortgage with no assistance from the Mortgage company who insist we cant 'remortgage', just to extend the timescale, because we are on benefits, and we wouldn't be able to have another interest only mortgage anyway.
    Contact the DWP, and they have stated that its down to Serco, contact Serco and they say we should speak to the DWP, contact the original Mortgage firm , and they state that they cant advise, and contact shelter or Citizens advice.
    Both of these state that as there is no Equity in the property that they would be unable to really help with a way forward. Even the ombudsman have no complaints process to bring this to any sort of end. Apart from handing over my keys to whomever gets my house first , I am at a loss. Any ideas anyone?????
Page 1
    • silvercar
    • By silvercar 9th May 18, 4:08 PM
    • 37,797 Posts
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    silvercar
    • #2
    • 9th May 18, 4:08 PM
    • #2
    • 9th May 18, 4:08 PM
    Why is there no equity? Property values have been increasing in virtually all areas compared to 20 years ago. Even with an interest only mortgage, you should see some gain.

    For mortgage options it would be helpful if you were willing to post the mortgage size and current value.
    • robatwork
    • By robatwork 9th May 18, 6:31 PM
    • 4,531 Posts
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    robatwork
    • #3
    • 9th May 18, 6:31 PM
    • #3
    • 9th May 18, 6:31 PM
    It's a fair point from silvercar - 2 bed bungalows are very highly sought after in just about every area of the country, and you've put an entire remortgage into doing it up. It beggars belief your property isn't worth more than it was 20 years ago - where are you in the country?
    • whits end lass
    • By whits end lass 11th May 18, 10:08 AM
    • 10 Posts
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    whits end lass
    • #4
    • 11th May 18, 10:08 AM
    • #4
    • 11th May 18, 10:08 AM
    The bungalow/dormer was bought for 100000k, a remortgage to sort out dodgy gas and electrics, and a new roof. Bathroom updated, new windows. The existing mortgage is 140000k. The current value is 140000. Living in South Wales, this is a norm. House prices do not rise if there is no employment in the area.
    I was even told to move to a smaller house ( than a 2 bedroomed bungalow). At 60 years of age I do not want to have to carry out another doer upper, because that would be all we could get for less than 140000.
    • whits end lass
    • By whits end lass 11th May 18, 10:14 AM
    • 10 Posts
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    whits end lass
    • #5
    • 11th May 18, 10:14 AM
    • #5
    • 11th May 18, 10:14 AM
    I also cannot believe that we are the 'only ones'. Thus the Ombudsman has no 'complain procedure'. Surely there are other people living in the UK with interest only mortgages, that are due to end and have the unfortunate and degrading experience on having to rely on benefits to survive, through no fault or choice of their own. Who do they contact?
    • mrginge
    • By mrginge 11th May 18, 11:55 AM
    • 4,635 Posts
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    mrginge
    • #6
    • 11th May 18, 11:55 AM
    • #6
    • 11th May 18, 11:55 AM
    How much have you got in the ISA?
    • Pixie5740
    • By Pixie5740 11th May 18, 12:12 PM
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    Pixie5740
    • #7
    • 11th May 18, 12:12 PM
    • #7
    • 11th May 18, 12:12 PM
    Have you been putting money into an ISA? My guess is that you stopped doing that when your husband become ill. If you couldn't afford to pay the I/O mortgage and continue to pay into an ISA then you wouldn't have been able to afford the monthly payments for a repayment mortgage either.
    • dunstonh
    • By dunstonh 11th May 18, 12:18 PM
    • 94,562 Posts
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    dunstonh
    • #8
    • 11th May 18, 12:18 PM
    • #8
    • 11th May 18, 12:18 PM
    Note: I am responding with all emotion removed. This may seem cold to some but I am focusing on the issues rather than waste text on wrapping it up in cotton wool. It is not written with any intention of being cold. Text can just look that way sometimes when you remove the wishy washy.

    Even the ombudsman have no complaints process to bring this to any sort of end.
    The complaints process exists and is defined and the ombudsman is part of it.

    I suspect its more a case that there is no wrongdoing here and no case to be answered.

    The bungalow/dormer was bought for 100000k, a remortgage to sort out dodgy gas and electrics, and a new roof. Bathroom updated, new windows. The existing mortgage is 140000k. The current value is 140000.
    So, you used the equity in the property as a cashpoint machine.

    I also cannot believe that we are the 'only ones'. Thus the Ombudsman has no 'complain procedure'.
    You are not. There are a few million others on interest only mortgages. However, there is nothing wrong with having an interest only mortgage. If you went into it with your eyes wide open and the sale was compliant then there is no case to answer.

    Its not as if you cant say you didnt know it was interest only. It has one of the most sensible product names you can get.

    that are due to end and have the unfortunate and degrading experience on having to rely on benefits to survive, through no fault or choice of their own. Who do they contact?
    Broadly speaking, the mortgage balance minus the value in the ISA will be in the same sort of ballpark as what you would have had if you had a repayment mortgage. So, where is the ISA money?

    In life you make choices. Sometimes with hindsight, the wrong choices. You then suffer negative events. However, the consequences of those are often linked to choices. For example, your husband fell ill. If you had chosen to take out insurance to cover illness then the money situation would not be a problem. if you chose to not pay the premiums each month and spend it instead then that is a choice. Most people will get away with that choice but the minority that suffer a claimable event will not.

    You bought a property that appears to have been substandard and borrowed again multiple times to spend on that property despite that. £100k in 1998 was twice the average house price in Wales. House prices in Wales have not been great over the last 10 years, only recently recovering to pre-credit crunch levels. However, a typical £100k house in Wales bought in 1998 would be worth £300,00 today. you say yours is worth less than half that.

    You dont get compensation for making the wrong choices. However, you do get benefits to help.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • robatwork
    • By robatwork 12th May 18, 3:24 PM
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    robatwork
    • #9
    • 12th May 18, 3:24 PM
    • #9
    • 12th May 18, 3:24 PM
    This is what beggars belief:
    https://www.nationwide.co.uk/about/house-price-index/house-price-calculator

    Put in all your numbers - Wales, 1998, 100,000



    So your numbers don't make sense - especially if you bought in a town like Cardiff, Newport, Swansea etc. If you bought rural then £100,000 would have got you a palatial 3 bed bungalow not a 2 bed doer-upper.
    • whits end lass
    • By whits end lass 14th May 18, 1:15 PM
    • 10 Posts
    • 1 Thanks
    whits end lass
    Thank you to everyone for your replies.
    In particular Dunstonh.
    As It seems you live in Norfork, I fail to see how you would have any knowledge of House prices in Wales whatsoever. Unless of course you are a property magnate , In which case, you really shouldn't be commenting on any post with your IFA 'wisdom', as it would only benefit other property magnates. Reading the other threads in this site it is clear that most people want to save money, and not advise people how they should have spent it . Whether it be now or 1999. Furthermore, you buy a house for lots of reasons; Near to work, near the motorway, near your children. In our case it was all three. Hindsight is a fantastic vehicle for some people to ride, however, the reality is I am not complaining about it, I was simply asking if anyone else was in the same predicament. Clearly; you are NOT
    • mrginge
    • By mrginge 14th May 18, 1:47 PM
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    mrginge
    So how much is in the ISA then?
    • Pixie5740
    • By Pixie5740 14th May 18, 5:26 PM
    • 12,960 Posts
    • 18,635 Thanks
    Pixie5740
    https://forums.moneysavingexpert.com/showthread.php?t=4671317

    https://forums.moneysavingexpert.com/showthread.php?t=5467428
    • dunstonh
    • By dunstonh 14th May 18, 6:01 PM
    • 94,562 Posts
    • 62,546 Thanks
    dunstonh
    June 2013
    May 2016
    May 2018

    As this time around is a year early, does that mean we get to wait another 4 years to be asked the same thing?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • whits end lass
    • By whits end lass 14th May 18, 6:42 PM
    • 10 Posts
    • 1 Thanks
    whits end lass
    Mr ginge- 20k, not that this has anything to do with the initial query??
    • John-K
    • By John-K 14th May 18, 6:42 PM
    • 654 Posts
    • 1,023 Thanks
    John-K
    Thank you to everyone for your replies.
    In particular Dunstonh.
    As It seems you live in Norfork, I fail to see how you would have any knowledge of House prices in Wales
    Originally posted by whits end lass
    Seriously? There are published data easily available, anyone can look them up.

    You seem to be avoiding the question of how much is in the ISA. It sounds as though you may have stopped paying in, and not paid for any insurance, so of course youíll struggle now.

    This is the result of your choices, there is no-one else to blame her Iím afraid.

    I know that it it not what you want to hear, but you gambled, and lost.
    • whits end lass
    • By whits end lass 14th May 18, 6:59 PM
    • 10 Posts
    • 1 Thanks
    whits end lass
    Pixie5740, Dunstonh
    You are both obviously very clever, so much so you have exceptional time on your hands to read every forum question, whilst taking great lengths to criticize and not really advise?.
    I would even go as fas saying 'Astute', especially for pointing out that I posted this question before. However now there is the added issue of the new benefit rules, on mortgage payments. Either way, It is still an issue, and I still would like advice. Unfortunately on my previous post in 2016 , i was bombarded with personal and confrontational, personally vindictive messages, and a few sales pitches from some independant Financial Advisors. Sadly that hasn't changed.
    • poppy10
    • By poppy10 14th May 18, 7:33 PM
    • 5,996 Posts
    • 7,244 Thanks
    poppy10
    Either way, It is still an issue, and I still would like advice. Unfortunately on my previous post in 2016 , i was bombarded with personal and confrontational, personally vindictive messages, and a few sales pitches from some independant Financial Advisors. Sadly that hasn't changed.
    Originally posted by whits end lass
    I don't see any vindictive messages on your old thread. Also across both previous threads you've never really answered the questions that have been put to you by people trying to help.

    According to the Land Registry, the average house price in Wales when you bought in 1998 was £47k. You claim you paid £100k, more than double the average house price.

    It's the equivalent of paying £323k for a house in Wales now. You'd get more than a do-upper 2 bed for that.

    In addition, you spent £40k (almost the equivalent of a whole new house at the time) on improving the property.

    It's inconceivable that your house is still only worth £140k twenty years later. House prices even in the most deprived parts of Wales have trebled over the last 20 years - and that's not taking into account the improvements you have made to it, or the fact that bungalows are in red-hot demand due to falling supply and an ageing population.

    If you won't tell the truth to people trying to advise you, there's little anyone can do to help. That's not vitriol or abuse, just honesty.
    • dunstonh
    • By dunstonh 14th May 18, 7:34 PM
    • 94,562 Posts
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    dunstonh
    You alienated people in your previous thread in 2016. You are doing it again now to people who did not comment in your previous threads. Its a bit of a habit. Have you considered that all the responses reflect your attitude?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • John-K
    • By John-K 14th May 18, 8:05 PM
    • 654 Posts
    • 1,023 Thanks
    John-K
    Whits end, your attitude stinks.

    If you were not so sneering at people who took the time to help then the tone of the replies might have been better, but you seem unable to avoid lashing out when people contribute.

    What ideas do you want here? You spent money that you should have been paying off your mortgage, so of course you are going to struggle now.
    • antrobus
    • By antrobus 14th May 18, 9:01 PM
    • 16,039 Posts
    • 22,878 Thanks
    antrobus
    . However now there is the added issue of the new benefit rules, on mortgage payments. Either way, It is still an issue, and I still would like advice.
    Originally posted by whits end lass
    The new SMI rules mean that instead of HMG paying the interest on your behalf, HMG now pay the interest on your behalf and expect to get repaid when the property is sold.

    However, in your case there is no equity in the property, and thus if it was sold HMG would get nothing. So in practical terms, it makes little difference.

    Your basic problem remains as it was, you have an interest only mortgage that will end in four years time and have no means of repaying the capital. You need a lender that is willing and able to extend the term of that mortgage until both of you die and they can get their money back.

    I am not a mortgage broker but I doubt that there are any lenders out there who will offer that kind of deal. I suspect that your only option is to persuade your existing lender to practice forbearance. If in four years time they threaten repossession, well two things; it will cost them money in terms of legal fees, and it will likely cost them in terms of the fact that repos frequently sell at a discount.

    So rather than take a hit of £20k or so, they might be prepared to do nothing and continue to earn 2.61% on the asset. Or thereabouts, because that's what the SMI rate is currently.

    I have no idea of whether they would or not. They might decide to go nuclear to get it off their books. In which case you will have to wait for the eviction and throw yourself on the mercy of the local authority.
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