BM Mortgages “Action Required” letter on interest-only mortgages?

by Readers Question

14:12 PM, 11th May 2020
About 3 months ago

BM Mortgages “Action Required” letter on interest-only mortgages?

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BM Mortgages “Action Required” letter on interest-only mortgages?

I have received a letter from BM Mortgages asking very intrusive questions about how I will repay an interest-only BTL mortgage I have with them and gently threatening to put me on a repayment mortgage (‘ask’ is the way they put it) if I cannot satisfy them that I have an adequate repayment plan in place.

The redemption date is well over six years away. I have had other BTL interest-only mortgages with BM that were redeemed either by the sale of the property or by me paying them down as the redemption date approached but this is the first time they have demanded to know how I will pay one off.

I am not in arrears and am complying with the T&Cs of the mortgage. I cannot see anything in the T&Cs that requires me to provide the information they want (endowment policies, pension plans and – most intrusively – the amount of my savings and investments and who they are with). Neither can I see anything that allows them to forcibly put me on a repayment mortgage. On the contrary, one of the provisions of the loan offer states, “You will need to make separate arrangements to repay this [the loan]. Birmingham Midshires does not know, or need to know details of these arrangements.”!

I am reminded of the shenanigans Mortgage Express got up to and am wondering if BM are trying it on as well. I am tempted to ignore them, but at the same time wary about there being some small print somewhere that allows them to declare ‘force majeure’ on the agreed terms of the loan. I don’t relish having to pay their costs or any penalties.

As it happens, I am in the fortunate position of being able to repay the loan, but as the product is a tracker at base rate plus 0.4% I’m clearly more focused on paying down other loans with higher interest rates.

Has anyone received a similar letter, and what did they do about it?

David



Comments

Lindsay Keith

9:42 AM, 12th May 2020
About 3 months ago

See your trusty expert solicitor. There may be even smaller print than the small that you have read!

Beaver

9:45 AM, 12th May 2020
About 3 months ago

Reply to the comment left by Lindsay Keith at 12/05/2020 - 09:42
Surely at the time you took out the mortgage they will have sent paperwork to you concerning the terms and conditions of the mortgage. Does it not give you your answer in the paperwork?

Jim Fox

9:53 AM, 12th May 2020
About 3 months ago

Interestingly, I have a number of BTL loans with BM, and like you, I received 2 similar letters last week, for loans maturing in 6 years time, asking for the same info.
However I also received 4 other letters from BM for loans that mature in 2/3 years, merely advising me to make sure I have repayment means/vehicles in place?
Not sure why the inconsistency?

simon Bruce

9:56 AM, 12th May 2020
About 3 months ago

This is exactly the reverse of my experience with Birmingham Midshires. Amongst other loans expiring at other times, we had £5-6m of interest only BTL mortgages with a range of lenders, all expiring in 2022 (they were 15 year term mortgages we used in 2007 to buy around 45 new houses).

A number of the lenders have decided to pull out of the market, CHL and Rooftop, and have indicated that we have to re-pay their loans by summer 2022 which is a drag and means I will have to find new lenders and pay fees. One or two like Northern Rock were uncompetitive and we have already re-mortgaged these elsewhere. Some have offered to renew on the terms available at the time the mortgages expire, but continue to send threatening letters, when you call them, they say the are obliged to send the letters by the PRA but that they will renew onto products available at the time when the others expire.

Best of all was Birmingham Midshires, I had 5 mortgages with them, I called them up to see what could be done, the person on the phone said, would you like to do it now? I said yes and there an then over the phone they extended the term of the mortgages at no cost and with no change of rate (2% over base) until 2037!

They were a real pleasure to deal with.

Simon

Roger P

9:56 AM, 12th May 2020
About 3 months ago

C&G tried this with me years ago my response was short and sweet "property may be sold or remortgaged"

J CHAPMAN

10:01 AM, 12th May 2020
About 3 months ago

Halifax send me these letters regarding my interest only BTL mortgages periodically, although not quite as intrusive. I am yet to receive one from B M Solutions. I do have savings, but I just ring and tell them the mortgage will be paid on the sale of the property. This has always been a satisfactory answer for them.

SM

10:02 AM, 12th May 2020
About 3 months ago

Hi, We have 2 BTL interest only mortgages BM and have heard nothing from them.

Ashleigh

10:17 AM, 12th May 2020
About 3 months ago

Maybe the building society’s are now worrying that if house prices drop significantly there isn’t going to be enough equity in the property to cover paying off the loan. If this is the case then we’ll all be in trouble! I still have another 2 years to run on all 9 of my mortgages and I am concerned that if the property prices do fall significantly I could possibly end up in negative equity with nowhere to go for remortgaging. Is it possible that the lender would call in the loans?

Mike W

10:50 AM, 12th May 2020
About 3 months ago

Hi David, under normal circumstances a response along the lines of "I will sell or remortgage" would cover the issue. All they are trying to do is establish your plans - which I suspect the regulator (post 2008) requires them to do. However we have now had two "black swans" (rare events) relatively close together which makes some people wonder whether selling or remortgaging would actually be available. Of course one might argue that if those options were not available we would all be in 'trouble'. Particularly so if the economy, stock market etc were also to stop. It can happen. Post WW1 Germany? Venezuela today?
Just a thought.

Coastal

12:12 PM, 12th May 2020
About 3 months ago

With an expected large downturn in the economy due to Covid, the housing market along with any looming end of term mortgages are likely to run into trouble. However, I'm sure we landlords can rely on the government to step in and help in the same balanced way they support tenants - not...!

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