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Matt Jones
Matt Jones, Solicitor
Category: Law
Satisfied Customers: 671
Experience:  I am a qualified and practising Solicitor with over 7 years post qualification experience
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In 2008, purchased a property known from us. The sale price

Customer Question

In 2008, B purchased a property known from us. The sale price was £170,000.
As B was unable to obtain a commercial mortgage because she had no regular income, the purchase was concluded with a payment of £80,000 and a mortgage from us of £90,000 for 12 years. The mortgage was larger than initially agreed because B wanted to carry out modifications to the property. B only wanted to pay interest on the mortgage and to repay the capital from future inheritance.
B requested that the monthly mortgage payments be fixed as she "found this easier to budget for" and she did not like the possibility of interest rate rises further down the line affecting what she had to budget for. It was agreed that the repayments would be fixed for the first two years and then we would consider setting a fixed rate for the remaining 10 years. The monthly payments were £412.50 paid by standing order which she instructed her bank to pay each month for the two year period.
Just prior to the second anniversary in April 2010, B asked us if we could set a fixed rate for the remaining period as she was "much happier knowing exactly what the repayments would be each month." We discussed this and decided that we were happy if the monthly repayment remained at £412.50 for the remainder of the mortgage period. We confirmed this with B and she said she was happy with that and agreed to it.
She asked if she needed to change anything at the bank and if the standing order needed to be changed in any way, as it had been set up only for two years. We said that the standing order could remain exactly as it was and she just needed to instruct her bank to let it continue for the next ten years.
This she did. The standing order continued to be paid each month at the fixed rate of £412.50 and has continued [for over 5 years] to date.
Up until this time no question or dispute has been raised by B as to there being anything wrong with the payment amount. We were in contact with her on an almost daily basis [as she lives next to us] and no mention of the mortgage was made. She did enquire as to the possibility of purchasing additional land from us to increase the size of her garden, but we had no wish to sell as the plot concerned was an access way to our site.
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Last year [2014]my mother passed away and following on from this, earlier this year, my wife and I had a meeting with our bank to review our finances. The bank looked at the mortgage to B and as it would be due for repayment in a few years asked if we knew how she would manage to repay it. We said we were not sure how she would do this, but perhaps she would be able to get a commercial mortgage this time to repay us. Our bank said that considering her age she needed to be sorting this out sooner than later as by the time our mortgage was due for repayment she would find it extremely difficult to take out a mortgage let alone at a manageable rate or term.
As we had not been aware of this and because of the bank's concerns, in an effort to be helpful, we mentioned this to B. She said that she had been advised that she could get a mortgage for much lower payments than what she was currently paying us. We said if that was the case, our mortgage could be paid off at any time, without penalties, or if she now had the funds available. In fact this would also be better for us. She asked if she had to pay her mortgage off earlier. We said that it still had five years more to run, but it would make sense if she could raise a mortgage cheaper, for her to do so.
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on AnswerUK Alex replied:
Thanks Tim.
I don't think you should be concerned. It was a verbal agreement that it would continue at the current rate and as such the agreement was confirmed that this would be the case. Your partner has confirmed this is the case and as such is evidence of an agreement.
Further, the fact that monthly payments have still been made and not objected to shows that there was no objection. You would expect as soon as the variable rate was due they would contest that they should not be fixed.
On that basis I do not think you need to worry and as such any claim is without foundation. If it was going to be variable you would expect someone to complain earlier.
Alex
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I wrote to her solicitors relating events and saying there ad been no overpayments. Today they replied:
........B has advised us that she would definitely have required any variation of the terms of the mortgage be in writing. Can you forward us a copy. B has no recollection of any conversation. Please make proposals for reimbursement and reply no later than 15th September.
Submitted: 1 year ago.
Category: Law
Expert:  Matt Jones replied 1 year ago.
HI i wil try and help.
Expert:  Matt Jones replied 1 year ago.
I think there may be a missing piece of this story line that you need to tell me about, or I am missing. It got to the point that you had informed her that there was 5 years left, but it would be in her interest to get a commercial mortgage and pay this off earlier. Then you paste Alex reply to you. What happened after you had the discussion about the possibility of re-mortgaging the property?
Customer: replied 1 year ago.

sorry yes. She then did nothing until we got a solicitors letter which was was Alex answered.

How can I send you the word document?

Expert:  Matt Jones replied 1 year ago.
I am not sure if you can attach it to the post, but but all means try with the paperclip option. Can you just give me the gist of what it says?
Customer: replied 1 year ago.

Balfour

Its a rather convoluted system they use on here and doesn't seem to work with most browsers. Lets try as images: Letters are not here in order. There is first letter from solicitors. My reply after asking Alex W on here. The solicitors letter which arrived yesterday.

I can download anything else now if this arrives with you OK.

Tim

Expert:  Matt Jones replied 1 year ago.
was the original mortgage secured as a legal charge and the terms of the re-payments written down originally?
Customer: replied 1 year ago.

Yes. Fixed for two years then variable. Balfour requested just before two years were up that it remain fixed as she preferred that know what it would always be.

Expert:  Matt Jones replied 1 year ago.
Hi sorry for the delay.
Expert:  Matt Jones replied 1 year ago.
ON reading the Mortgage and taking into account what the other side are saying, there seems to be a fundamental disagreement of the terms of the mortgage. The mortgage deed is slightly confusing. The description of "Rate of Interest" is defined as base rate plus a quarter percent. However later in the deed there is a fixed period. If I have this right the other side are saying after the 2 year period the interest payment reduces to the 0.75%, whereas you are saying that this simply continues after discussion with the borrower. Do you have (1) anything in writing from the time that the loan was made indicating that the interest would or could rise after the year period and (2) what is the reason for the "Rate of Interest" referred to as 1/4 % over base?
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Customer: replied 1 year ago.

No other paperwork. They say it should have reduced after two years. We don't necessarily disagree with what the document says but they verbally requested we fix from the two years [with the recession, they were worried about interest rates going through the roof] which we agreed to do and said that it could remain at the same payment which they then continued to pay until we suddenly get the letter from their solicitors, 5 years later.

Expert:  Matt Jones replied 1 year ago.
Please call on the above number when you are ready .I will be going out shortly so the sooner the better
Customer: replied 1 year ago.

which number?

Expert:  Matt Jones replied 1 year ago.
the one above where i have put contact number
Expert:  Matt Jones replied 1 year ago.
just posted again
Expert:  Matt Jones replied 1 year ago.
Hi tim. Thanks for the conversation. To summerise:There appears some ambiguity with the Deed. The "rate of interest" description throws things out a bit. Was that supposed to be daily as you could argue by virtue of clause 2.2 or yearly as the other side are arguing Were the payments toward the "loan" as the deed seems to suggest, or the interest payments? these are questions that would occupy the courts mindThere is a good argument that the high potential variable rate of around £50 would be an incentive to the borrower to discuss the changes come the expiry of the year periodCertainly the continuing payments over this period would suggest, as Alex has said, that she was comfortable with to the status quo for over 5 years, and so is good evidence for youI think you need the conveyancing file from the time you sold/mortgaged to give some contemporaneous detail to what was in the minds of the parties at the time of the loan.to protect your position you should consider intimating a claim against your solicitor so as to put their insurers on notice (although as we discussed your situation is not usual!) You may need to perhaps consider mediation to agree a formal variation of the deed if the matter were to settle out of court.
Customer: replied 1 year ago.

Thank you