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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10915
Experience:  Solicitor with 5+ years experience
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I have an interest only mortgage that expired in August. The

Customer Question

I have an interest only mortgage that expired in August. The bank originally said that they would extend the term but they now say that following MMR they can't do that under their policy and have drawn up a repayment plan over 5 years to repay £296000. This will be almost impossible and will force me to sell everything I own. If I don't, however, they say they will sue me for breach of contract and repossess my home. The interest payments are up to dat and I am making a small reduction each month.
I'm 65 years old and have offered repayment over a longer term or part cash and part repayment which they have refused.
The mortgage was drawn up in 2006 and they have been able to give me a copy of the contract.
Can they do this?
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Alex Watts :

Hello my name is ***** ***** I will help you with this.

Alex Watts :

Did they make this extension offer in writing please?

JACUSTOMER-sj1typyw- :

No not yet they are not offering an extension they want structured repayment over 5 years although 50% is in year 5

Alex Watts :

Ok - but when they offered an extension as you said, how did they communicate this?

JACUSTOMER-sj1typyw- :

No only over the phone with my relationship manager. She now says she cannot recall the phone call - she is not denying it happened only that she cannot recall it.

Alex Watts :

Ok -so how would you be able to prove that what was agreed?

JACUSTOMER-sj1typyw- :

Its not about proving what was agreed. Its about them following FCA regulations and offering a range of solutions to satisfy Principle 6. But the question was bearing in mind that I'm not in arrears in that i am paying the interest payments, I am infact repaying the debt and I approached them to arrange a sensible repayment schedule. They are trying to enforce a repayment schedule that is all but impossible and say that if I don't agree and comply they will sue for breach of contract and sell my house. They haven't been able to produce the contract but I do have a copy. The FCA have said that if an interest only mortgage is out of contract but not in arrears then the terms and conditions continue until the mortgage is repayed but they dispute this. There is nothing specific in the contract to give them this power infact when it was drawn up and signed in 2006 they were desperate to throw money at me and the concept of repayment couldn't have been further from them mind. The implication then and since was that a new deal would be available on expiry (not in writing) but they now say the new MMR rules prevent that although the FCA transitional arrangement would say that they do and that it is Barclays internal policy that prevents it.

Alex Watts :

Have you raised a complaint with the FCA yet?

JACUSTOMER-sj1typyw- :

The FCA don't deal with specific complaints only the financial ombudsman. The FCA wil give advice and help with their regulations but Barclays don't seem to acknowledge or even care about FCA regulations. Any complaint to the Ombudsman would take months to respond to. All I am looking for is whether, bearing in mind I am not in arrears etc and have offered to repay, they could still take me to court for breach of contract.

Alex Watts :

Indeed. Did you complain to the FO?

JACUSTOMER-sj1typyw- :

I complained to the FO because I asked for an appointment in April to discus this - they said they were setting up a new department to deal with interest only mortgages and were not in a position to talk to me until August. On that point Barclays apologized and gave me £200. I finally got the meeting last week and was stunned by their attitude and response - I have banked with them for nearly 50 years and never missed a payment in my life. They don't really care about that or FCA regulations, what concerns me is the threat that if I don't accept their repayment schedule which is impossible they will sue etc. I think thats what they want or are they bluffing?

Alex Watts :

Ok and what is it you want to achieve please?

Alex Watts :

It sounds like you may have to go to Court.

JACUSTOMER-sj1typyw- :

I guess the issue is that we have a mortgage contract which has expired. They are fully secured and there is no argument that they will be repaid. There is nothing specific in the mortgage agreement to say that they have the power to sell my property if the money is not repaid on demand. I don't know why they are adopting this attitude but there has been a lot in the press about it and its not just Barclays. I just want to understand from a legal point of view where I stand i.e could they and in your experience are they likely to?

Alex Watts :

Well in reality ANY mortgage or loan is repayable upon demand

Alex Watts :

Even if it is up to date. That is a standard term

Alex Watts :

They can call in any loan in at any time, even if you have had it for 15 years and never missed a payment

Alex Watts :

What you could do though is if they called it in, seek an injunction to stop them enforcing their loan right

Alex Watts :

Or if they did issue proceedings seek an order that it is suspended on payment terms

Alex Watts :

In reality those are the options available to you

Alex Watts :

But by them saying its repayable upon demand - that is true of all loans and mortgages

Alex Watts :

Can I clarify anything for you about this today please?

JACUSTOMER-sj1typyw- :

Well they they couldn't have called it in before the expiry date which was in August. Overdrafts are repayable on demand not loans or mortgages - I think we are going round in circles - I was hoping to speak to someone who was up to speed on the FCA regulations that cover these situations. Thanks

Alex Watts :

Mortgages are if you check the terms and conditions

Alex Watts :

Repayable upon demand. By convention they don't, but they can

Alex Watts :

Can I clarify anything else for you today?

JACUSTOMER-sj1typyw- :

No thanks

Alex Watts :

What you can do is take one of the steps I outlined above, ie seek an injunction for a threat or apply to suspend if they try to seek possession.

Alex Watts :

I would like to make sure I have answered the question for you of course.

JACUSTOMER-sj1typyw- :

Well not really no - you seem to be saying that any mortgage it is repayable on demand and therefore the lender could at any time legally demand immediate repayment even if the mortgage was for 25 years and was only a year in. If repayment is not immediately forthcoming they can then legally possess the property and sell it. The cannot be true I have certainly looked at the terms and conditions of my mortgage and it was repayable in August not on demand. Thank you

JACUSTOMER-sj1typyw- :

can we close this down please

Alex Watts :

I have opted out - so someone else should be along shortly to help

JACUSTOMER-sj1typyw- :

nobody else has come can we close this out now?

Alex Watts :

Ok.

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