ALL MONIES mortgage clauses - needs publicising

[Amethyst]

Press Release - 21/01/08

HOMEOWNERS RISK PROPERTY WITH MORTGAGE LENDER’S UNSECURED LOANS – CHECK FOR ‘ALL MONIES CHARGE’ BEFORE SIGNING, WARNS MONEYNET.CO.UK

• Little known ‘All Monies Charge’ locks mortgage to further borrowing
• Read small print before agreeing to additional unsecured loan or overdraft with mortgage lender
• Ask lender to remove clause – or look elsewhere for funds

A LITTLE known clause in some major lenders’ mortgage agreements could lead to homeowners losing their property should they default on any additional borrowing, warns personal finance data comparison site Moneynet.co.uk.
Far from being an unsecured loan, further borrowing or an overdraft with their mortgage lender could in fact be secured against their property if the original mortgage agreement included an ‘All Monies Charge’ clause.
“It’s shocking that borrowers who believe their additional borrowing is safely separated from their mortgage are actually agreeing to risk the security of their home – something many people would never consider doing,” says Moneynet.co.uk chief executive Richard Brown.
The ‘All Monies Charge’ clause in the mortgage agreement documents issued by some lenders means the lender secures all debt against the mortgaged property, including any additional borrowing such as personal loans or overdrafts. This means they are entitled to repossess the property should the borrower default.
“People may think better the devil they know when deciding which lender to choose for an unsecured loan – but unless they read all the small print they could be unaware that they are to all intents and purposes signing up for a secured loan rather than unsecured,” he says.
In a year which could be a challenge to many homeowners as the economy faces turbulent times, awareness of this silent but deadly clause could make the difference between losing and keeping their homes.
“Anyone in the process of taking out a mortgage should ask their solicitor to find out if the lender applies an ‘All Monies Charge’,” adds Brown. “If they do, it’s worth asking the lender to remove the offending clause.”
Mark Beaton, Head of Residential Conveyancing and a partner with East Anglian firm Ashton Graham, said: "This issue is not always investigated by a borrower and can come as a surprise at a later date. I would therefore advise clients to raise the question with their mortgage broker or potential mortgage company at an early stage."
Brown concludes: “If the lender refuses to remove the clause I would recommend finding a lender that does not include this exacting requirement. If this isn’t feasible, at least borrowers will know that any additional borrowing must be sourced elsewhere in order to protect the security of their home.”
* BBA/BSA data, April 2007

[Amethyst]

Re: ALL MONIES mortgage clauses - needs publicising

FIRST DIRECT OFFSET MORTGAGE - first direct legals - mortgage terms and conditions

Now is this the all-monies clause ?

1. Events of Default
   1. Your loan facility will become immediately due and payable on demand by us and no further sums may be drawn by you under your agreement with us if any of the following events occur:
      1. anything said by you (or on your behalf) in support of your loan facility application or while your agreement with us is in force and having a material effect on our decision to lend or to continue to lend to you is inaccurate;
      2. there is any failure to complete any of the legal formalities relating to the Security;
      3. you fail to pay any amount payable under your agreement with us when due (which, for the avoidance of doubt includes, without limitation, not ensuring there are sufficient available funds in your first direct account mentioned in paragraph 6(h) above to meet the amount payable each month);
      4. you fail to comply with any other obligations under your agreement with us;
      5. there is any breach of any obligation imposed by the Security;
      6. if any of you become bankrupt or enter into any arrangement with your creditors or a receiver, administrator or trustee is appointed over any part of your assets or any of you is subject to similar proceedings;
      7. if, after the date of our Security, you give to anyone else or anyone else acquires any other security or similar interest over or in the Property, which in our reasonable opinion adversely affects our Security.
      
      
   2. If you fail to pay any amount payable under your agreement with us when due and or we make demand (in this event or if any of the other events mentioned in paragraph 14(a) above occur you will be in arrears and if we make demand:
      1. we may cease to combine accounts for interest calculation purposes under paragraph 7 above;
      2. you will continue to pay interest on your loan facility as provided in paragraph 7 until it is repaid in full;
      3. we may use any money in any account you have with first direct and/or HSBC Bank plc to reduce or repay the amount owing under your agreement with us;
      4. you will pay us on a full indemnity basis any costs, expenses incurred and our reasonable charges in enforcing compliance with or remedying any breach of your agreement with us or the Security or recovering your loan facility;
      5. any money incurred under paragraph (iv) above (whether demanded or not) will be debited to your loan facility (even though this may cause you to exceed your Account Limit) and once debited will attract interest accordingly.
      
      
   3. 1. Where you borrow or may borrow from us, we may give details of this loan facility and any other accounts with us on which you may borrow (together "the accounts") and how you manage the accounts to credit reference agencies. This information is used by lenders when considering your applications for credit.
      2. If you borrow and do not repay in full and on time or make proposals for repayment acceptable to use within 28 days of demand and the amount is not in dispute, we may tell credit reference agencies who will record the outstanding debt. If details of your default are given to credit reference agencies, this may make it difficult for you to obtain credit elsewhere in future.
      
      
   
   

[green45]

Re: ALL MONIES mortgage clauses - needs publicising

The lender sought to enforce the mortgage. The interest rate on the mortgage was 20% per annum.

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green45

[PlanB]

Re: ALL MONIES mortgage clauses - needs publicising

The lender sought to enforce the mortgage. The interest rate on the mortgage was 20% per annum.

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green45

Are you aware that this thread is five years old :confused2:

If you have a problem with a lender seeking repossession of your property you need to start a new thread in the Mortgage section. Remember to flag up the fact that you're based in Scotland where housing law is completely different to the rest of the UK.