This week we heard about someone who
had received their 3rd letter from the Cheltenham &
Gloucester (subsidiary of that public/tax payer bailed out phenomenon
known as Lloyds TSB) asking them how they proposed to pay off the
balance of their mortgage in 5 years time when it reached the end of
it's term. They had dismissed the first letter as an error and replied to the second letter giving as much detail as possible. I add here that the outstanding loan is interest-only so there is no
capital being repaid. They have never missed a repayment – even
though their business has been through and is possibly still going
through the worst period in it's 25 year existence. They recently
virtually paid off one mortgage account with a £25,000 cash payment
and continue to overpay the balance of their loan. Not good enough
for the C&G – they want details of exactly how the balance will
be cleared in 5 years time! With documentary proof of the value of endowment policies that they have already been told will only cover 5% of the outstanding balance.
Could
it be that the loan is on a very low rate that would not be available
today? Would it be better for them if the borrower remortgaged
elsewhere giving them cash to lend again at a rate that's better for
them? Would it be better for them if the borrower decided to opt for
a capital/repayment loan that was more expensive?
Perhaps
it would be fair if the borrower wrote back to C&G and asked them
for a detailed plan with proof of how the payments will be made on
the £40 Billion of direct so-called 'Government Aid', otherwise know
as Joe Public's money, that kept their business afloat?
Anyone
else heard similar stories of bullying by state owned banks, who are
probably hiding behind a facade of proposing responsible lending,
hassling customers who are making their payments and doing their best
to survive the recession? The person in our example has a 48% loan
to property value, is in their early 50's. Is the C & G at risk of not getting their
money? I think not.
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