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Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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A 'friend' wanted to buy a house from us but couldn't afford

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A 'friend' wanted to buy a house from us but couldn't afford the whole amount and couldn't get a commercial mogage. We agreed that they would pay approx half and we would give them a 12 year mortgage on the rest. They wanted to know that the repayments wouldn't change so we fixed the first two years [of a 12 year period] at a monthly payment after which it would be variable, and would look at it again before the two years were up. Just before the two years were up they asked us if we would fix it for the remainder. We verbally agreed that the same fixed monthly amount as had been paid would continue for the full term. They agreed. They asked what they needed to do as the bank had been told their standing order had been only for the first two years. We said just tell your bank to keep paying as before. The payments continued for 5 years up till now. We have just received a letter from their solicitors saying that as the mortgage deed was variable from after 2 years they should have only been paying £375 a month LESS [because of bank rates] and for us to pay back thousands of pounds.
Hello my name is ***** ***** k will help you.
Did anyone else witness the conversation?
Customer: replied 2 years ago.

We can not remember if we were both in the discussion. We are next door neighbour and quite often saw each other together or seperately. Certainly m wife and I were both in on the discussion as to what we did

Ok. They also continued to pay the agreed sum and never objected until now?
Customer: replied 2 years ago.

Yes that's right.

This is a statement I just put together:

In 2008, H. Balfour purchased a property known as Bernside, from us. The sale price was £170,000.

As Balfour 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 Balfour wanted to carry out modifications to the property.

Balfour requested that the monthly mortgage payments be fixed as she "found this easier 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, Balfour 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 Balfour 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.

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 dispute has been raised by Balfour as to there being anything wrong with the payment amount.

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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 Balfour 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 very difficult to take out a mortgage let alone at a manageable rate or term.

To be helpful I mentioned this to Balfour. She said that she had been advised that she could get a mortgage for much lower payments than what she was currently paying us. I said that our mortgage could be paid off at any time if this was so or if she now had the funds available. In fact this would also be beneficial to us. She asked if she had to pay our mortgage off earlier. I said that it still had four years more to run, but it would make sense if she could raise a mortgage cheaper for her to do so.

Tim Thirst

Thanks Tim. I dont 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.
Can I clarify anything for you about this today please?
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