05 Feb 2013 9:28 PM:

Hi Baz

Well...a problem shared is a problem halved! :)  Sometimes it's easier 'talking' to knowledgeable strangers on a forum like this and asking their input than discussing things like this with your family and close friends!

Many thanks to you and Smiley and the other members for your valuable contribution.  (BTW I'm a 'she' not a 'he' :D)

Thread: Changing to interest only mortgage

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05 Feb 2013 4:39 PM:

Baz....Verbal communication cannot be recorded and can be denied (as we have found to our detriment in the past).

Our communication with the bank has been done via emails deliberately so we have everything recorded in writing from them. We have spoken to our account manager several times on the telephone but always followed up with an email to verify the details discussed.   The procedure to change to an interest only mortgage started in November 2012, so it has not been a 'quick' decision for the bank to allow us to convert.  We really could not sleep at night with worry waiting for them to make the decision to allow us to convert.

As our situation stands (and also considering we have no other option), switching to a temporary interest only mortgage will prevent the bank from repossessing our property.  It really is a 'no brainer situation' for us, especially as our property is not in negative equity. 

The most important details of the modification of the mortgage has been verified.

1. The interest rate change during the 12 month period.
2. The interest rate after the 12 months is over.
3. The bank will not demand full payment of the loan after the 12 month period (providing monthly payments are up to date)
4. The mortgage will convert to repayment for the remaining term of the loan.
5. We have to take their life insurance as a condition of the modification.

 

 

Thread: Changing to interest only mortgage

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05 Feb 2013 12:59 PM:

The main thing I was concerned about was that the bank would demand the mortgage be paid in full after the 12 month period is over.  However, the bank has confirmed (in writing via email) that the mortgage will revert to repayment with an interest rate of 2.5% + euribor for the remaining term providing we keep the life insurances.  If we don't keep the life insurance the interest rate will be 3.5% + euribor.  There is no clause in the modification which states that the bank will demand full repayment of the mortgage after the 12 months.  

 

Thread: Changing to interest only mortgage

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04 Feb 2013 6:28 PM:

Thank you all for your sound advice, it is much appreciated!

Changing to an interest only mortgage is our only lfe line at the moment.  We're off to the Notary thisThursday to sign the documents.  All this was arranged via email correspondance without even setting foot inside the bank and we're meeting the bank representative at the Notary. 

One question though Baz.....what do mean when you say the banks might want ALL the money back once the 12 month period has elapsed?  Do you mean they will want the deficit of the repayment balance to be paid after 12 months? 

Thread: Changing to interest only mortgage

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22 Jan 2013 7:21 PM:

Hi Ian

Many thanks for your reply.  It does make me feel 'slightly' better to know that other people are in a similar situation.  Our current rate for our repayment mortgage is 2.27% (incl. euribor).  Re. life insurance...we had this same problem with the bank when we first took the mortgage out with them. Even though we had exisiting policies in force with another insurance provider and provided them with the evidence the bank didn't want to know.  They insisted we have their policy in force for at least 1 year....which they said was a condition of the mortgage (which we only found out a day before the signing at the notary!)  After the first year elapsed they still dug their heels and said we could not cancel the life policies...another year later they allowed us to cancel it!  So we're back to square one again, with them insisting we take out unneeded life insurances to obtain an interest only for 12 months...and once again tied to the policies on renewal for gaining a better rate!  We're towing the line with them as we really need to convert to interest only and don't want them to retract their offer of 'help'.

We have our property on the market at the moment so hope to sell it before the 12 month period.  The crunch will come at the end of that period if we haven't been able to sell...until then I suppose we will just have to "bite the bullet"!

Thread: Changing to interest only mortgage

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