Consolidated loan

[Booga]

In 2007 I applied for a £15000 loan and was advised that I didn't fit the criteria for affordability but I could get a consolidation loan for £55000 to pay off other debts. I was never told that what I was agreeing to was a secured loans and the paperwork did not explain that either but my loan has now been sold on and the new company want their money back now or will look to force sale of my house. Was I midsole this loan, where do I stand.

[Diana M]

Re: Consolidated loan

Who was the original lender in 2007 and who owns the loan now?

Did you take out the original loan direct with a lender, your bank or with an intermediary such as a broker?

If you're surprised to find it was a secured loan then either you weren't made aware of that at the time or it wasn't made clear enough.

You say the new owner of the loan wants it back now or they will try to force the sale of your property. Does this mean the original loan term has expired but there's still money owing if it was an interest only loan? Or have arrears built up so the creditor is threatening repossession.

Sorry for all the questions but the more information you can provide the easier it is to offer suggestions on how to handle your situation

Di

[Snoopy1948]

Re: Consolidated loan

Hi there

Are you stating that you actually took the £55000 loan to consolidate other debts? If so, no one would have anticipated that to be unsecured but from what you say, you obviously did not know that.

Am I also assuming that since the new company want to call the loan in, you have defaulted in payment? Do you consider yourself able to meet the repayments when they were originally proposed?

It is interesting that you state 'In 2007 I applied for a £15000 loan and was advised that I didn't fit the criteria for affordability but I could get a consolidation loan for £55000 to pay off other debts' as that sounds illogical. What was your original reason for seeking the loan and was £55,000 the amount of existing debts at the time?

If you have been mis-sold a loan, I can imagine that would only have happened in ignorance of the mechanics of it all and I don't know if that is a defence although if key facts were 'glossed over' due to your lack of understanding, that may be a different matter.

[Diana M]

Re: Consolidated loan

you state 'In 2007 I applied for a £15000 loan and was advised that I didn't fit the criteria for affordability but I could get a consolidation loan for £55000 to pay off other debts' as that sounds illogical.

It's possible to be turned down for a £15k unsecured loan but accepted for a £55k secured loan because a charge over the property would minimize the lender's risk.

It's also possible that the lender wouldn't advance £15k unsecured due to the borrower's other credit commitments but was willing to lend the £15k if all their other liabilities were 'repaid' by the larger consolidation loan.

If the monthly payment on the larger loan was less than the sum of the repayments on all the other liabilities (maybe lower APR over longer time) then that would address the affordability issue too.

If the loan was arranged through a broker one can't rule out the possibility that the larger the loan the larger the commission

Dl

[Crazy council]

Re: Consolidated loan

There was companies that did this as a business moddle pre 2008. Usually, they make loads in costs/fees

Who was the :
Loan/mortgagee co
solicitors
and any others involved.

do you have original paperwork

[Snoopy1948]

Re: Consolidated loan

It's possible to be turned down for a £15k unsecured loan but accepted for a £55k secured loan because a charge over the property would minimize the lender's risk.

It's also possible that the lender wouldn't advance £15k unsecured due to the borrower's other credit commitments but was willing to lend the £15k if all their other liabilities were 'repaid' by the larger consolidation loan.

If the monthly payment on the larger loan was less than the sum of the repayments on all the other liabilities (maybe lower APR over longer time) then that would address the affordability issue too.

If the loan was arranged through a broker one can't rule out the possibility that the larger the loan the larger the commission

Dl

Good points. Sad to say, and this is no criticism of the asker, but it looks like this whole debacle was sold on the back of a commission spree and that is deplorable, especially as the asker is now asking if this loan was mis-sold. If the £55000 taken was indeed to consolidate other debts, which my have included current unsecured/secured borrowing, then the affordability question is of prime focus and should form part of the enquiry, along with details of the contract and exactly what was and what was not made clear.

When I worked in financial services in the 80s, there was an abundance of refinancining that may well mirror this ( and what Crazy Council is referring to ) where the arrangement fees were set an anything from £5 to £10K ( rolled up in the loan ) along with commissions to boot ( probably up to 10% of the loan advanced with, at that time, no regulation to cover declaration ), and affordability was the last thing on anyone's mind.

I suggest this case is taken to a solicitor or financial consultant for a long hard view of the lending circumstances as the loan appears to be with a centralised lender who has zero concern about getting the loan back and nothing else. Nothing is going to be resolved ( if indeed that is possible ) without prompt help and intervention.