Interest Only Refusal

klunkster

Hi, I recently requested to avail of a clause in my mortgage contract that allows me to pay interest only for a period of 36 months over the term of the mortgage for minimum 3 month periods. I spoke to the bank and they asked me why I wanted to avail of this. I said there was a rumour of redundancy in my workplace. They said they would not agree to let me go interest only because my job is in danger. If I wanted to go on holiday then they would have agreed.

I had previously posted about this but the moderator shut down the thread because I had asked for advice on how to 'backtrack' from my 'possible redundancy' statement on the phone to the bank.

I need to avail of this interest only option now. I am looking for advice on how to do this.
Before you shut me down again moderator could I please ask you to read the section in my mortgage contract dealing with the interest only option.

'Repayment of this Advance is to be by way of a capital and interest (repayment) mortgage. The Applicant may elect at any time to pay interest only (Interest only period) on the advance during the term of the mortgage for minimum periods of 3 months and up to a maximum period of 36 months. In the event of the account falling into arrears, continuation of the Interest Only Period will be at the sole discretion of the lender.'

My account has never fallen into arrears so I can't see why they would have grounds to refuse me. Any advice would be appreciated.

unclebill98

"will be at the sole discretion of the lender"

There you go. It was never a clause it was only ever an option that could be implemented regardless of the position of the mortgage. The do not have to provide a reason.

phormium

I would have read that differently, it looks to me that continuation of the interest only period is what is at the discretion of the bank in the case of arrears. The previous bit seems to give interest only in the normal situation as a feature of the mortgage.

Ask the bank to clarify.

Tails142

unclebill98 wrote: »

"will be at the sole discretion of the lender"

There you go. It was never a clause it was only ever an option that could be implemented regardless of the position of the mortgage. The do not have to provide a reason.

That's only if it falls into arrears. If I was you OP I would ring back and push it again, you might get a different person handling your case.

Tow

Put your query to the lender's complaints dept in writing, look for a 'final response letter'. If your not happy with the final response, sent your complaint into the regulator.

unclebill98

Tails142 wrote: »

That's only if it falls into arrears. If I was you OP I would ring back and push it again, you might get a different person handling your case.

Thats a snippet from a very long agreement. The fact remains the same. Its up to the lender to agree to it regardless.

Even if the OP allows arrears to happen they can still say no. There is 1000's of mortgages out there from the boom years with 6 month holiday options. You stand no chance of getting them. They would have been a sweetener to take the mortgage, you would have been told you can use it if you want to travel etc, those T&C have changed.

The treat of redundancy is just that, a treat. It's not happened and given the information provided it would appear the OP's situation has not change from paying the mortgage in full too, for argument sake today.

Until you circumstances change a bank will not entertain a reduction in your mortgage payments.

klunkster

I have rung the bank twice about this and have spoken to two different people who both said they would ring me back after they spoke to their supervisor. Both said it was a grey area and that they wanted me to fill in a financial statement which I am reluctant to do.
Unclebill, I am not sure I follow what you mean entirely. Are you saying I have no chance of getting this option even though my account has never been in arrears and that this appears to be the only condition in the contract?

unclebill98

klunkster wrote: »

I have rung the bank twice about this and have spoken to two different people who both said they would ring me back after they spoke to their supervisor. Both said it was a grey area and that they wanted me to fill in a financial statement which I am reluctant to do.
Unclebill, I am not sure I follow what you mean entirely. Are you saying I have no chance of getting this option even though my account has never been in arrears and that this appears to be the only condition in the contract?

Firstly I agree that you should get you interest only option. If it was a option on the offer letter the bank should give it.

What I am saying regardless of how its stated in the offer letter the final decision to allow it is up to the bank. I've not seen one holiday period being granted unless the financial situation of the mortgage holder has dramatically changed. Banks simply to not wish to allow someone who can pay, not pay. After all there are 1000's who can't etc.

This in itself is annoying as your only option is to allow it to go into arrears and then deal with bank on a reduce payment. However his is not advisable and is dis-honest. You will have to prove why you can't pay it. If nothing has changed then they will know and refuse it again.

So you wish to retract the "redundancy" slant and go with the "holiday" slant, again there is no reason to believe they would allow that. The person answering the phone can not say nor can anyone above them without 1st assessing your financial situation. How they do that is under the MARP's process. Even though your not in arrears the assessment process is the same.

Bottom line here is you are paying, nothings change so why cant you pay? Thats their stance not my opinion.

If you do not get anywhere or get to a solution that you are happy with you must make a complaint, get the final response and then send it onto the ombudsman for assessment.

Best of luck, its not a nice situation to be in.

murphaph

unclebill98 wrote: »

Thats a snippet from a very long agreement. The fact remains the same. Its up to the lender to agree to it regardless.

It's not up to the lender to agree. If it's in the contract the lender is obliged by contract law to switch to interest only.

If they don't then the ombudsman should uphold the terms of the contract for the OP.

We haven't seen the contract in its entirety of course, but if it's in there then it's not "optional" for the bank.

unclebill98

murphaph wrote: »

It's not up to the lender to agree. If it's in the contract the lender is obliged by contract law to switch to interest only.

If they don't then the ombudsman should uphold the terms of the contract for the OP.

We haven't seen the contract in its entirety of course, but if it's in there then it's not "optional" for the bank.

I am open for correction but everyone one of these type of options I've seen are subject to the banks approval.

murphaph

unclebill98 wrote: »

I am open for correction but everyone one of these type of options I've seen are subject to the banks approval.

If it says that in the contract then it is. If it doesn't then it isn't. The OP needs to carefully read their loan agreement and take it further or drop it based on that.

klunkster

Thank you all very much. I just finished filling in my query using the online contact form to the bank. I quoted the clause in the contract and requested a final respone as advised above. I will let you know their response to me

klunkster

Hi, I got great news today on the phone. After requesting a final response and quoting the contract they have now agreed to IO!
Thanks very much for everones help and advice on this.

murphaph

Now get it in writing!

unclebill98

Well done, customer 1, bank 0.

Yes, ensure you get it in writing.