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Thomas
Thomas, Lawyer
Category: UK Law
Satisfied Customers: 6256
Experience:  BA (Hons), PgDip, Practising Solicitor
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My Sanander mortgage expires at the end of next year 2013.

Resolved Question:

My Sanander mortgage expires at the end of next year 2013. Unfortunatly due to poor investment returns, I will have insufficient funds to pay it off. I have no problem with my payment of £600 per month and the equity in the house is in excess of £500,000 over the aproximatly £200,000 mortgage. It would be most helpful to me if I could keep the morgage going untill I retire in 2016. Unfortunatly requests for an extention have been dismissed as the mortgage was initially tied to an endowment policy which it never was. I never get a completely straight answer from Santander and so far I have been going around in circles for nearly 2 years but they are adament that they will not extend my existing mortgage.

I can only negotiate repayment or equity release morgages with other companies and they are much more expensive. Do I have any legal rights to remain in the property after the mortgage expires or should I expect reposession and expensive fees etc.

At the moment I see no other answer but for my wife and I to move, which is not at all what we want to do.
Submitted: 1 year ago.
Category: UK Law
Expert:  Thomas replied 1 year ago.
Hi,

Have you discussed their enforcement options with them?

Tom
Customer: replied 1 year ago.

Hi


 


I am afraid not I am not aware of what they are I felt that they would reposess if I did not pay up by December 2013

Expert:  Thomas replied 1 year ago.
Drafting your answer now, should be five minutes.

Tom
Expert:  Thomas replied 1 year ago.
Hi

Thanks for your patience.

If the mortgage term expires and you do not have sufficient funds to repay any balance owing on the property then your right to remain in the property does not automatically cease.

However, not being able to repay the amounts owed is a breach of your mortgage conditions. The lender would be entitled to take enforcement action in respect of the balance owing.

If you are able to agree a repayment plan with them which is acceptable to them then this would solve the problem. However, they are under no obligation to agree to a repayment plan or to offer you a new mortgage, so you can’t compel them to.

If the lender enforces the arrears then they may attempt to do so by issuing an application for an order for sale of the property on the basis of the amounts owing. You would have to defend this application obviously. It’s highly possible that they may obtain an order for sale. You want to avoid this at all costs because you may be liable for their fees and they would have no qualms about selling for a discount because all they care about is obtaining enough money to pay off their mortgage.

I would be proactive about this and see if you can get another mortgage or equity release scheme to avoid litigating and the potential further expense/risk to the equity that there is in the property.

If you cannot secure alternative mortgaging/equity release then you may have to consider downsizing to a small property and paying off the mortgage from the proceeds of sale. If you are able to show the lender that you are being pro-active then they may grant you a period of grace to make alternative arrangements

Sorry it could not be better news but my view is that it’s better that you are aware of the risk now.

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Kind regards,


Tom
Customer: replied 1 year ago.

Hi Tom


 


It is just about what I suspected. Is there really no recourse for me in law to prevent an enforced sale at the end of the term of the agreement?


 


I was hoping that there might be some protection for the consumer in the event of a poorly constucted morgage contract. I was completly surprised at the short term (12 years) and it being tied to an endowment policy of £35,000. Quilst the "flexible mortgage" terms allowed me to borrow considerably more, I was even more surprized when I requested an extension they were not at all prepared to negotiate terms. To me it would be reasonable to expect Sandander to offer me something to avoid this conflict, particularly in the light of so many endowments under performing and had this been an interest only mortgage it would have been extended.


 


Best regards


 


David

Expert:  Thomas replied 1 year ago.
Hi David,

Your recourse would be to defend the application for an order for sale if one is made.

If the mortgage was not suitable for you then you may have a claim of misselling against the advisor would suggested that this was the best possible mortgage for you. You need to check your records as to who was your financial advisor and then see if you can claim under their indemnity policy if it was not if enforcement action is taken.

Though you may (may) have a claim agians them it will not suspend the application that the lender makes unless you can show it was Santander would provided you with advice in the first place but you would also have to show that the advice itself was professional negligence.

Kind regards,


TOm
Customer: replied 1 year ago.

Hi Tom


 


This is more like it, if you could bear with me just a little more are there any referances in law or guidance documents that I could use to help support my arguments against them.


 


Best regards


 


David

Expert:  Thomas replied 1 year ago.
Hi David.


Yes, the financial ombudsment provides guidance:-
http://www.finan cial-ombudsman.org.uk/publications/factsheets/mortgage_endowment_complaints.pdf

http://www.financial-ombudsman.org.uk/faq/mortgage.htm
http://www.financial-ombudsman.org.uk/publications/technical_notes/qg4.pdf

Please remember to rate my answer.

Kind regards,

Tom

Thomas, Lawyer
Category: UK Law
Satisfied Customers: 6256
Experience: BA (Hons), PgDip, Practising Solicitor
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