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Nationwide Changed Mortgage From Interest-Only To Repayment

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One reader arranged a perpetual interest-only mortgage with Nationwide, but received a letter stating it would be changed to repayment. I received an undated letter from the “head of transaction processing” for Nationwide four months ago informing me that my interest-only mortgage would have to be reverted to a repayment mortgage. This would come into effect from next month. This mortgage has been in force for many years. When they started it, it was on an arrangement of a perpetual interest-only mortgage. Nationwide were aware at the time there was no vehicle required to repay this loan and they agreed to this through the local branch.

I was fully aware of my circumstances at the time of the loan and so were Nationwide. When I contacted it, Nationwide said its records showed the term of the further advance, which was what you were particularly concerned about, as five years and the repayment vehicle was selected as “sale of main residence”. It stressed that the original letter and advice you received were correct in stating that the outstanding debt needed to be repaid at the end of the term for the further advance. Along the way, Nationwide told me that the outstanding balance of the further advance was a little less than £2,000. This was far less than the amount I had thought, so I voiced my doubts. It reconfirmed the low figure. However, it transpired that Nationwide had left off a nought and the amount is £20,000. This kind of typo strikes me as disconcerting. You have four mortgage accounts with Nationwide all set up on an interest-only basis. Only one had a term remaining when you wrote to me and I understand nothing had been confirmed about the others. After I contacted Nationwide it agreed to extend the term of all this lending, including the £20,000 further advance.

It says it had until then intended that the further advance should be repaid imminently. Now the terms of all the mortgages are for 19 years and nine months. These will all remain on an interest-only basis. Link

Are they only testing, if they can go away with it?

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What's the source of the snippet? Hard to tell and it rambles a bit.

I expect NW are acting within their T and Cs

The article is the same, word for word..incomprehensible.

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What's the source of the snippet? Hard to tell and it rambles a bit.

I expect NW are acting within their T and Cs

Link is the last word in the OP quote

http://uk.finance.yahoo.com/news/nationwide-changed-mortgage-interest-only-120245079.html

From

http://www.telegraph.co.uk/finance/personalfinance/consumertips/jessicainvestigates/10622085/Nationwide-changed-my-mortgage-from-interest-only-to-repayment.html

Edited by 7 Year Itch

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Would be a nice earner for them in some cases, but would lead to many defaults in others? Who knows, outside events will shape the future of the UK I suppose?

This is risk-motivated for Nationwide not profit-motivated. They make more profit by you having as large a loan as possible, paying it off is not in their interest (no pun intended).

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Any chance of this catching on, sheeple having to actually pay down their debts I mean?

It makes you wonder if nationwide are worried the property my not cover the outstanding debt at the end of the term?

If the mortgages were for 25years with the term remaining they must have been taken out near the peak. <_<

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Any chance of this catching on, sheeple having to actually pay down their debts I mean?

Only the sheeple, mind. Not the Govt

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I expect NW are acting within their T and Cs

Hard to say. Even the admin FUBAR on the £20k loan wouldn't have made them back down if they were within their rights.

Changing from IO on a loan they knew had no independent collateral effectively calls the loan in. If that becomes widespread a lot of people are looking at swift decline into poverty, depending on how old they are.

The fairness in lending regs will have something to say on that.

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So it is now down to the government to pay the peoples mortgage debt......lender of last resort. ;)

the account as written is mumbo jumbo.

first it appears a writer had a PERPETUAL IO loan...ie, it will not be paid back until he decides, or his estate is wound up, or he breaks the terms.

then its about a further loan which did appear to have a term, as he acknowledges the balance was lower than he thought, until NW coughed up to missing a 0. then its four loans all IO but now on a term of 19 odd years.

first its a contributors tale, then its the writer, and the tenses are all scrambled. Its impossible to tell from the article exactly what the situation is, who it applies to or what the resolution was.

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not read it but looking at the responses here it seems the poster had got a no vehicle interest only mortgage and for reasons I haven't looked into, he was switched without his consent to a repayment mortgage?

if so its actually disgraceful, very probably a breach of contract, and actionable through the courts, no?

if the guy wants to take a punt and leave himself exposed in some way, and the bank agrees to it, then surely he should, be allowed to

banks have infatilised the customers to the point where they cant even withdraw their own money from their accounts, so this latest nonsense comes as no surprise.

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Nationwide have pulled their Let to Buy (re) mortgages. Customers who want to rent their houses out now have to apply through The Mortgage Works or else where.

Something going on with Nationwide?

http://www.mortgagestrategy.co.uk/news-and-analysis/mortgages/nationwide-scraps-remortgage-applications-for-buy-to-let/2006172.article

I actually have a mortgage with nationwide and was upset to be refused a further advance of 20k a year ago due to the fact that i had already taken one out for 20k a couple of years earlier

No matter that the property is valued at 300k, my outstanding mortgage when applying for a second further advance stood at 120k, and my annual salary was/is 40k!

Will switch very shortly to another lender as its beyond a joke. Infanitlising the customer, as I said earlier.

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Nationwide have pulled their Let to Buy (re) mortgages. Customers who want to rent their houses out now have to apply through The Mortgage Works or else where.

Something going on with Nationwide?

Maybe they are going to concentrate on what they were born from, people wanting to buy a home.

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Maybe they are going to concentrate on what they were born from, people wanting to buy a home.

Yes...their own home/s paid for in full by the time they stop working/retire, so saving them being repossessed or forced to sell to pay outstanding debts....not being bailed out by the same people that paid for their home because they bought something they could afford, not buying something they could not afford to buy but only afford to only service... ;)

Interest only £250,000 @ 4% 25 years = £833 pm.... payable £250,000 interest + £250,000 owing, total payable £500,000

Repayment on £250,000 @ 4% 25 years = £1320 pm.......total payable £396,000

Interest only mortgage is over £100,000 more expensive over time.

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I actually have a mortgage with nationwide and was upset to be refused a further advance of 20k a year ago due to the fact that i had already taken one out for 20k a couple of years earlier

No matter that the property is valued at 300k, my outstanding mortgage when applying for a second further advance stood at 120k, and my annual salary was/is 40k!

Will switch very shortly to another lender as its beyond a joke. Infanitlising the customer, as I said earlier.

:lol:

This is satire? Right?

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I actually have a mortgage with nationwide and was upset to be refused a further advance of 20k a year ago due to the fact that i had already taken one out for 20k a couple of years earlier

No matter that the property is valued at 300k, my outstanding mortgage when applying for a second further advance stood at 120k, and my annual salary was/is 40k!

Will switch very shortly to another lender as its beyond a joke. Infanitlising the customer, as I said earlier.

TBH sounds sensible to me. WTF are you wanting to treat your house like a cash-dispenser? Why do you need to if you're so solvent?

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TBH sounds sensible to me. WTF are you wanting to treat your house like a cash-dispenser? Why do you need to if you're so solvent?

Sensible or not, do they have any real right to do so is the question - I'd say not.

Surely issues like whether I have the cash available to me or not are less important as the question of could the amount be raised in any prospective sale?

After all no one is doubting that on a residential property I get to keep all the profit from a sale and the bank will receive only the balance of the original loan. In reality, by any definition the equity is mine, and I should have the right to dispose of it as I wish?

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Sensible or not, do they have any real right to do so is the question - I'd say not.

Surely issues like whether I have the cash available to me or not are less important as the question of could the amount be raised in any prospective sale?

After all no one is doubting that on a residential property I get to keep all the profit from a sale and the bank will receive only the balance of the original loan. In reality, by any definition the equity is mine, and I should have the right to dispose of it as I wish?

Sorry I should have said balance of the outstanding loan.

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