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Abbey explains mortgage warning
One couple's experience with Abbey: "Devastating"
The Abbey bank has had to explain a letter it sent to its flexible mortgage customers warning of the impact of lower house prices on their contracts.
It said if their home's value had fallen so the amount borrowed was more than 90% of its value they could have to pay a lump sum to reduce it.
After it sent the letters the Abbey said it had no plans to invoke the clause forcing borrowers to do that.
But it did not guarantee that it would not do it in future.
Flexible mortgages have become more popular because they allow homeowners to borrow money up to an agreed limit in stages and pay it back early if they wish to.
But Abbey wrote to some of its customers saying their credit limit had been reduced. It said according to the terms of their mortgage agreement, if the value of their home falls so their mortgage balance exceeds 90% they will be given three months to pay the difference. Abbey said after sending out the letters it wouldn't invoke the clause and had no plans to do so.
One couple's experience with Abbey: "Devastating"
The Abbey bank has had to explain a letter it sent to its flexible mortgage customers warning of the impact of lower house prices on their contracts.
It said if their home's value had fallen so the amount borrowed was more than 90% of its value they could have to pay a lump sum to reduce it.
After it sent the letters the Abbey said it had no plans to invoke the clause forcing borrowers to do that.
But it did not guarantee that it would not do it in future.
Flexible mortgages have become more popular because they allow homeowners to borrow money up to an agreed limit in stages and pay it back early if they wish to.
But Abbey wrote to some of its customers saying their credit limit had been reduced. It said according to the terms of their mortgage agreement, if the value of their home falls so their mortgage balance exceeds 90% they will be given three months to pay the difference. Abbey said after sending out the letters it wouldn't invoke the clause and had no plans to do so.
