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The Secret Clause In Your Mortgage Contract

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It’s called an 'All Monies Charge' clause and it allows your mortgage lender to try to repossess your home if you fail to keep up payments for any debt you have borrowed from that lender.

...possible concrete case for a missell ....if you find this in your contract ....sue ...on the basis this was not drawn to your attention and who in their right mind would sign away their rights in this way.....?.... :unsure:

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Which just underlines the fact that there is no such thing as an unsecured debt if you have any equity in your home. How they get away with calling loans and credit cards unsecured debt and charging a high premium, I do not know.

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Interesting. I'm buying at the moment and I only found out about this when my solicitor pointed it out.

But I'm not taking out any loans and I'm keeping to sensible salary multiples so I wasn't planning on testing it anyway.

I think people on here (and maybe even MSE, shock horror!) have pointed out for a while that if you have savings and a mortgage with the same bank there are often special clauses they can use to use your savings to cover any shortfall on the mortgage.

So the lesson for everyone is: keep your savings and investments in a separate bank to the one your mortgage is with. Be aware of banks that have the same parent company e.g. First Direct/HSBC, Alliance & Leicester/Santander.

Edited by efdemin

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I'd always thought they would have that clause in there anyway?

---

I always think outside the box where I can - this is my mentality:

If I was the bank, what checks could I do to make sure the client is not in trouble?

It would be very easy to get a bot to crawl through all the accounts each month, at almost zero cost (to check the health status of your debt slaves customers.)

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I'd always thought they would have that clause in there anyway?

---

I always think outside the box where I can - this is my mentality:

If I was the bank, what checks could I do to make sure the client is not in trouble?

It would be very easy to get a bot to crawl through all the accounts each month, at almost zero cost (to check the health status of your debt slaves customers.)

Yeah exactly, this is a shock?? :unsure:

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Yeah exactly, this is a shock?? :unsure:

I suppose for 90% of the population it is. The UK is a sea bass fishing ground. Becareful not to fall for the bait! Could be costly!

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Is the lesson here that you should make sure you take out any unsecured loans from a different lender to your mortgage?

Hey, I've just thought of a whole new business! Mortgage lenders should buy the debts from other lenders of people they have given mortgages to. That way they can use the "any monies" clause to get payment when the original lender couldn't. Yet more blood from a stone - I amaze myself! :P

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you take independent legal advice on your mortgage documents. Unless you are stupid enough to let the solicitor act for you and the lender, in which case you have agreed (check, you will have done), that in the event of a conflict of interest that they act for the lender. If you remortgaged only, it will have been clear in the first letter you received that the conveyancers were acting for the lender, not you.....

if people are too tight or ignorant to spend a few quid on understanding a document that can bind them for 25 years and may cost them their home and are not capable of understanding it themselves, who's the idiot ?

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you take independent legal advice on your mortgage documents. Unless you are stupid enough to let the solicitor act for you and the lender, in which case you have agreed (check, you will have done), that in the event of a conflict of interest that they act for the lender. If you remortgaged only, it will have been clear in the first letter you received that the conveyancers were acting for the lender, not you.....

if people are too tight or ignorant to spend a few quid on understanding a document that can bind them for 25 years and may cost them their home and are not capable of understanding it themselves, who's the idiot ?

clearly not the borrower who "Didnt know it was possible the Lo-COST endowment wouldnt meet the repayment and its not fair".

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Hey, I've just thought of a whole new business! Mortgage lenders should buy the debts from other lenders of people they have given mortgages to. That way they can use the "any monies" clause to get payment when the original lender couldn't. Yet more blood from a stone - I amaze myself! :P

This appears to be a non-issue. If you have equity in your home, unsecured lenders, whoever they may be, can go after that if you fail to repay. They might have to bankrupt you to get it, but they can get it anyway.

I dont see why anyone on HPC would object to banks doing this either, after all, if the borrower doesnt repay, then someone prudent ends up paying for it instead.

For the process of lending to work, you need to have in place powers that force repayment when the borrower can repay, and also have powers that hurt the borrower for non-repayment, otherwise lending simply doesnt work.

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Hey, I've just thought of a whole new business! Mortgage lenders should buy the debts from other lenders of people they have given mortgages to. That way they can use the "any monies" clause to get payment when the original lender couldn't. Yet more blood from a stone - I amaze myself! :P

You've missed your calling - with ideas like that you are banker material. They wouldn't even need to buy the debt in some cases - just exhange it £ for £.

Re any monies clause; It doesn't have to be a mortgage for banks to do this - they can take funds from any of your savings/current accounts to pay any type of debt you have.

e.g current account to loan account.

further to this, if you have an overdraft, they can dip into that to pay a loan instalment. Effectively they are paying debt with (often more expensive) debt without your consent. (and they'll charge you if it tips you over the agreed overdraft limit.) it's all down to massaging their bad debt figures.

great hey?

Edited by Reck B

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...possible concrete case for a missell ....if you find this in your contract ....sue ...on the basis this was not drawn to your attention and who in their right mind would sign away their rights in this way.....?.... :unsure:

possible? or concrete?

Cue solicitor ad: "If you didn't want, need or understand.......you can sue!"

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Anyway, I'm sure all HPCers know that if you borrow, you borrow from a different institution from the one you save with. And in fact if you save, you spread your savings across several institutions. This is HPC lore hoary with age. Not least because if your bank gets wound up your debts will be subtracted from your savings before any compensation is calculated. You could end up cashless.

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Yeah exactly, this is a shock?? :unsure:

Indeed. It is just that many thinks borrowing money from the bank is their God given right and going to the bank to ask for a loan is like going to Disney land.

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<Sigh>

The clause is a no brainer.

Without the clause, if you had a natwest mortgage you'de be able to take a natwest unsecured loan, use it to pay off your netwest mortgage, and then default on the loan and keep the house.

In reality, as of April 2006, all loans are effectively secured on your house. The laws were changed to make it easy for the banks to secure loans against property. Before the new law the banks had to spend about £10k in paperwork and court time. Now they just need to print a list of debtors, addresses and ammounts, add a cover page, and get it stamped by the clerk of the court.

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This appears to be a non-issue. If you have equity in your home, unsecured lenders, whoever they may be, can go after that if you fail to repay. They might have to bankrupt you to get it, but they can get it anyway.

So the premium paid for borrowing unsecured is a con.

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All monies charges are pretty common - usually to secure business overdrafts that are repayable on demand. They don't have specific instalment repayments, so if there's default it's debatable whether the courts can step in and suspend the possession order on regular payments of the arrear.

see here: https://docs.google.com/document/d/1BtyINb_hhcyVo8GDg7cuuS1UmBAWibct8ME83t9fkw4/edit?hl=en#

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So the premium paid for borrowing unsecured is a con.

You will probably get a bigger credit limit on your credit card, and be more likely to be offered an unsecured loan, if the bank thinks you have equity in your home.

So it isnt really a con.

If you have lots of equity in your home, and you do need to borrow, why would you go unsecured anyway? Any sensible lender would allow you to borrow against the equity in your home at a much lower rate of interest. So if you did have equity, and you decided to borrow money on an unsecured loan, you deserve to be charged more interest because either a ) you are a bit dim with money and that increases the risk you wont repay, or b ) you dont really have the equity in your home that you say you have in which case you are a riskier borrower anyway.

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  • 238 Brexit, House prices and Summer 2020

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