Extending an interest-only period on a tracker mortgage?

byrne_baby_byrn

Hi guys,

I'm wondering if anyone has tried to extend an interest-only period on a tracker mortgage lately. I know someone who wants to do this but the bank is telling them that they will only do this if they give up their tracker mortgage. Can the bank do this?

Two years ago, when they took out the mortgage they were assured by the bank manager that if they needed to extend the interest-only period in the future that it wouldn't be a problem. Now they are looking to do it but the bank is playing dirty. They will give a interest-only extension but not at the rate they are currently paying and not on a tracker rate. They are also saying that because property prices have fallen that the loan-to-value ratio of the mortgage has changed and that they will be looking for more security (i.e the deeds to another property to be a further security on the mortgage).

I'm wondering if anyone else has heard of this going on. Can the bank do this? If so, is it legal? Is there anything that my friend can do? There definitely seems to be no loyalty on the bank's end of things, despite all their promises in the past. By the way, my friend has never missed a payment and is not in arrears, so I'm finding it hard to understand the bank's attitude here.

Thanks for any help.

Jay

Blackjack

byrne_baby_byrn wrote: »

Hi guys,

I'm wondering if anyone has tried to extend an interest-only period on a tracker mortgage lately. I know someone who wants to do this but the bank is telling them that they will only do this if they give up their tracker mortgage. Can the bank do this?

Two years ago, when they took out the mortgage they were assured by the bank manager that if they needed to extend the interest-only period in the future that it wouldn't be a problem. Now they are looking to do it but the bank is playing dirty. They will give a interest-only extension but not at the rate they are currently paying and not on a tracker rate. They are also saying that because property prices have fallen that the loan-to-value ratio of the mortgage has changed and that they will be looking for more security (i.e the deeds to another property to be a further security on the mortgage).

I'm wondering if anyone else has heard of this going on. Can the bank do this? If so, is it legal? Is there anything that my friend can do? There definitely seems to be no loyalty on the bank's end of things, despite all their promises in the past. By the way, my friend has never missed a payment and is not in arrears, so I'm finding it hard to understand the bank's attitude here.

Thanks for any help.

Jay

Yes, your friend is looking to change the terms of the original Contract, therefore the bank is entitled to look to make some changes too.

The Bank is looking to change this because Trackers are costing them money, it costs more for them to fund a Tracker than it did some years ago, they are no longer offering this type of product.

byrne_baby_byrn

Hi Blackjack,

Thanks for the reply. There are arguments for and against it. It boils down to the fact that he was assured when he took out the mortgage that there would be no problem extending the interest-only period, but now that doesn't appear to be the case.

I'm kind of hoping that someone on the boards has actually gone through this or would know someone who has. My friend is probably going to be taking this further via an official complaint (which probably won't get it sorted) and then to the financial regulator. So, from that point of view he just wants to know the lay of the land, so to speak. There must be hundreds of other mortgages (investor mortgages, for example) that are coming up for review or going on pay down. Are the banks getting away with forcing people off trackers in this fashion?

Again, I'm hoping that someone out there has gone through this.

Thanks again,

Jay

monkeypants

I'm unemployed and was on interest-only for six months. I needed to extend that, which the bank would only do if I made a small capital payment also. There was no mention of a switch from the tracker. If there was, I'd complain to the Regulator and probably every local TD I could find.

Blackjack

byrne_baby_byrn wrote: »

Hi Blackjack,

Thanks for the reply. There are arguments for and against it. It boils down to the fact that he was assured when he took out the mortgage that there would be no problem extending the interest-only period, but now that doesn't appear to be the case.

I'm kind of hoping that someone on the boards has actually gone through this or would know someone who has. My friend is probably going to be taking this further via an official complaint (which probably won't get it sorted) and then to the financial regulator. So, from that point of view he just wants to know the lay of the land, so to speak. There must be hundreds of other mortgages (investor mortgages, for example) that are coming up for review or going on pay down. Are the banks getting away with forcing people off trackers in this fashion?

Again, I'm hoping that someone out there has gone through this.

Thanks again,

Jay

The circumstances have changed for both parties, Bank and Customer. Its no longer suitable for the Banks to offer Trackers, they are costing money. Just as your friend's circumstances have changed where he is now looking to extend his interest only period, the circumstances have changed for Banks Funding, and Trackers are no longer an option. What was mentioned as being OK 2 years ago is no longer the case.

byrne_baby_byrn

monkeypants wrote: »

I'm unemployed and was on interest-only for six months. I needed to extend that, which the bank would only do if I made a small capital payment also. There was no mention of a switch from the tracker. If there was, I'd complain to the Regulator and probably every local TD I could find.

Thanks monkeypants,

Nice to hear that you got sorted. Yes, I'd be on for making a lot of noise too. Unfortunately my mate has dealt with some of the local TDs in planning matters in the past and wouldn't have the same faith.

Basically, in my opinion, what the bank is doing here is a form of blackmail. So, I'm hoping that the Regulator would already be looking into cases like this. Perhaps they already have a stance on this but I can't find anything online.

Anyway, again it's good to hear that you got sorted. As a matter of interest, how long ago was this? And, if you don't mind saying it, how long did the bank extend your mortgage by? (If you don't want to post it on the thread, you can always PM me)

Thanks a million,

Jay

gogo

byrne_baby_byrn wrote: »

Hi Blackjack,

Thanks for the reply. There are arguments for and against it. It boils down to the fact that he was assured when he took out the mortgage that there would be no problem extending the interest-only period, but now that doesn't appear to be the case.


Jay

Assured dosent mean a thing, has he got it in writing? If not he dosent have a leg to stand on, as stated above he is asking to change the terms of his original contract, he wants to change it not the bank,
It sounds like your friend;) is in negative equity, so the bank are more than in their rights to request more security if he is requesting an extension on interest only. they have already given him this interest only peroid, and now he's looking for another, the banks alarm bells are ringing. So of course they are going to take him off the tracker if they can.
Anything you(or anyone) were told in a bank two years ago is 90% likely to have changed now, does your friend not read the papers, talking about telling your local td's is just funny tbh.

byrne_baby_byrn

Hi gogo,

Thanks for the winky smile, ha ha! You wouldn't be a cynic by any chance ;-) No, luckily it's not me in this position, so I'm just trying to help a friend out any way I can. Hopefully there are more stories like monkeypants' one, above.

I'll post up anything I find, if it's of use to other people too. At the moment I'm just looking to hear the experiences of people who have actually gone through this, in order to get first-hand information.

Cheers,

Jay

Trampas

I thought the new rules stated that if you have a tracker or whatever and you wanted to change something about the mortgage that you didn't have to give up your tracker or whatever contract your own.

Financial Ombudsman I suggest

themoneyguy

I have to disagree with the above.

It is very important to differ a family home from a Buy to Let property in this case.

The banks cannot and will be in trouble if they try to take a customer off a tracker rate if it is a family home.

Buy to Let properties are a different story. These are seen by banks, and the regulator as commercial deals and will not attract the same amount of protection from watch dogs. As any business deals between 2 parties if one party decides to renegotiate the terms ( which in this case is represented by a request of interest only) the other party can agree to changes subject to their own changes ( changing your rate).

On a separate note applying for another interest only rate doesn't help you in the long run. It ends up adding thousands to the amount you have to pay back. If you dont have tenants and your not in negative equity my advice is just sell ....cut your losses. We have to get out of the mind set that is we have a second property we have to hold on to it no matter what.

Ok... moral high ground aside....


Taking the above into consideration and if it was ME trying to get this interest only period I would declare it as my family home by supplying 2 utility bills as evidence i have moved in...... then it falls under the protection of point number 1.

byrne_baby_byrn

Trampas wrote: »

I thought the new rules stated that if you have a tracker or whatever and you wanted to change something about the mortgage that you didn't have to give up your tracker or whatever contract your own.

Financial Ombudsman I suggest

Hi Trampas,

I was under a similar impression. I'm not sure about buy-to-lets however, as themoneyguy pointed out. Again, this is not something that I'm directly involved in, but I was hoping that I could dig up some information from someone who had been through this already and pass it on.

I agree with you on the Financial Regulator. Although some of the posts here seem to think that it's a case of tough luck, from what I've heard elsewhere the Financial Regulator comes at things from the customer's point of view. Things have to be realistic, after all.

Anyway, I'm in danger of breaking my own rules here, ha ha! This thread could easily erupt into 150 posts based on nothing more than opinion and/or speculation.

Thanks for the post.

byrne_baby_byrn

themoneyguy wrote: »

I have to disagree with the above.

It is very important to differ a family home from a Buy to Let property in this case.

The banks cannot and will be in trouble if they try to take a customer off a tracker rate if it is a family home.

Buy to Let properties are a different story. These are seen by banks, and the regulator as commercial deals and will not attract the same amount of protection from watch dogs. As any business deals between 2 parties if one party decides to renegotiate the terms ( which in this case is represented by a request of interest only) the other party can agree to changes subject to their own changes ( changing your rate).

Hi themoneyguy,

Cheers for the post. I'm afraid it's a buy to let, as far as I know. You said though that the banks can be in trouble if they take someone off a tracker mortgage on their family home. Is this something recent? If so, I don't suppose you would have a link to something online that I could pass on, would you? Again, I'm pretty sure that it's a buy to let mortgage, but I'm not 100% sure of the details.

themoneyguy wrote: »

On a separate note applying for another interest only rate doesn't help you in the long run. It ends up adding thousands to the amount you have to pay back. If you dont have tenants and your not in negative equity my advice is just sell ....cut your losses. We have to get out of the mind set that is we have a second property we have to hold on to it no matter what.

Ok... moral high ground aside....

I see you're trying to keep things relevant. I've been trying to do the same myself. A post like this could easily run in all sorts of directions. At the risk of meeting you half way on the moral high ground, it's a funny situation out there in the property market at the moment. From talking with an auctioneer recently, even if someone did want to sell at the moment (and I'm sure there are plenty that do) there are two problems: no-one is buying; and the banks aren't giving mortgages!

I haven't even asked my mate if he's in negative equity as I don't think it's any of my business, but I'm guessing that since half the country is in negative equity, then there's a good chance that he is.

themoneyguy wrote: »

Taking the above into consideration and if it was ME trying to get this interest only period I would declare it as my family home by supplying 2 utility bills as evidence i have moved in...... then it falls under the protection of point number 1.

This is really good advice, and I'll pass it on. Perhaps this might be able to help him out. Again, if you knew of a relevant link to this that I could pass on too, I'd appreciate it.

Cheers for the help.