Prior to letter rec'd yesterday from lender stating that proceedings had started, the last letter we had from them stated that they were happy to carry on accepting interest only payments as long as we understood the implications at the end of the mortgage term. Lenders refer to "previous reminders to bring a/c up to date" but when queried I was told these were verbal reminders of which they have a record on their computer. This was just not true. Where do we stand if it is their word against ours? Surely if they were not prepared to accept just interest payments anymore, we should have had notification of this in writing before they started proceedings?

-- (sue-watson@cwcom.net), February 09, 2001

Answers

A lender can not force you into paying capital & interest on a mortgage, it is your right to pay interest only as long as you have a repayment vehicle in place to repay the capital at the end. As long as you service the interest portion of the loan there is nothing the lender can do. In fact the lender would prefer interest only, THEY MAKE MORE MONEY.

Of course, paying interest only might reduce your monthly repayment in the short term but it will cost you a hell of a lot more in the long term. Even if you have an arrangement to pay interest only and the lender has quoted the monthly payment required (check that it is correct)there is nothing the lender can do if you decide to pay a little more than is required, the extra then obviously automatically goes to capital, they are not likely to send the extra back to you.

Rest assured, what ever you pay the the lender takes his bit first (the interest) & you get the left overs, but you should periodically have the account checked making sure the lender is not overcharging.

-- Bryan Turner (bryan@loancheck.fsnet.co.uk), February 10, 2001.

Sue, I Know you've got a lot on your plate but have you issued a Subject Access Rights Notice on the lender? This would help you determine what they have and haven't got on their computer.

By the way, at a bit of a tangent, could I just mention that you won't be getting 'legal advice' as such on this Q&A? You will get help, advice and support (I hope!), but most of us are not legally or financially qualified. I think that's pretty much understood though. All best, and good luck.

-- Eleanor Scott (eleanor.scott@btinternet.com), February 11, 2001.