Nat West, Loan recall

[razor]

Hi. Apologise if I have got this wrong, but I,m struggling as to where to post my problem, (not having done this type of thing before)
I'm trying to help my daughter, who with her husband, took out a "Flexible Business" loan,with Nat West, in 2002, for £88,000.00. her original re-payments started off at £793.00 per month, then approx 2yrs ago, Nat West increased that re-payment figure to £1,200 per month.(£400 increase)
She has now been informed by Nat West, that they must re-pay the loan in full, or face re-possesion in Dec 2008.
The loan was made, against their property, which is her own hair salon, for which the whole property is valued at approx £200,000.00. Nat West are saying they will sell the property,and give her the amount left.
I know that my daughter has defaulted on the re-payments, but the exact amount I do not know. I have asked her to find out what payments she has made,since taking out the loan. She is obviously not in a financial position where she can take out any other loans,in order to pay this one off.
I do have futher details of her situation,if someone offers to offer help.

Regards Razor.

[Guest]

Re: Nat West, Loan recall

Hello razor and welcome to the site.

Do you know why NatWest increased the repayments by so much?

Has she received any court documents or is this demand to repay from NatWest at this stage?

What are the terms of the loan and can she renegotiate the terms and offer a reduced payment in order to prevent the repossession?

Is her hair salon also her home, or is it purely a business premises?

[razor]

Re: Nat West, Loan recall

Hi Cetelco

Thanks for replying to my post.

Q1
I do not know why Nat West increased the repayments by £400/month, I have asked my daughter to give me a list of ALL her payments,,amounts and dates,
I believe the payments were taken direct from her Nat West A/c. She did say that Nat West wrote to her and said that the increase in re-payments were because the loan would not be paid, in the time which was agreed on the initial paperwork. and that in order to repay the loan by the due date, the monthly payments were increased to £1200.00/month

I have her original contract, which states---
Amount of loan........£88500
Arrangement fee ....£1621.
Repayments........179 monthly, of £793.17,
Final payment .....£793.48

Q2
Yes, she has attended a court hearing I think about 6 weeks ago, when Nat West agreed to delay the repossession until Dec31st. I will find out from her the exact wording.

Q3
She has written to Nat West, asking for a meeting, but they replied by saying that they were not prepared to have a meeting, I have suggested that I would go with her, and ask for a meeting, but I want to get more information from my daughter, I'm thinking the same as you, why did Nat West increase her repayments by so much. If I can get her payments, it could give some clues.
On her contract, it does state the interest rate as either 3% per year above Base rate. OR 7% per year variable automatically with Nat West base rate.

Q4
Yes, the ground floor is a Gents/Ladies hair salon, upstairs there is a Tattoo room, (she rents the room out) and she lives in the other two rooms.The whole property is rated as commercial.

Would Nat West be obliged to give a more detailed reason why they have recalled the loan, I know my daughter has not always paid the full monthly amounts, she also is in dept to the Inland Rev, but that is partly due to the increased monthly repayments.
I think I must get her re-payment details before going much further.

I appreciate you interest, if you can give me any advise, please be free to ask any questions, and I will try to get the answers from my daughter.

Regards razor.

[Guest]

Re: Nat West, Loan recall

Hi razor

First of all, what does your daughter want to achieve?

Is her business a going concern or is it failing?

Can she make the payments on this loan or is there no prospect of her being able to service the debt?

It might be possible to renegotiate the terms, but that does depend on what she wants to do.

[razor]

Re: Nat West, Loan recall

Hi Cetelco

Thank you for getting back to me. I have interrogated my daughter, and obtained her statements/ letters etc.

She and her then husband (now divorced,but his name is still on the loan agreement) took out the original loan with NatWest for £88500, in July 2002.
Monthly repayments were £793.17, then in Nov 2006, increased to £834.97, and again increased in July 2007 to £853.80. I suspect these increases were due to interest rate rises, as all payments had been made in full,and on time.
She received a letter from NatWest in Oct 2007 which reads quote--

" Following a review of the above loan account, it has come to light that due to an increase in the banks base rate the loan will not be repaid in May 2014, The dated originally intended.
In order for the loan to end with the agreed timescales, an increase in the monthly payments will be required. The new amount will be £1201.28"
end quote

That is an increase of £347.48 per month, which I think is excessive.

Unfortunately, my daughter then defaulted on her re- payments from Aug 2007, not paying even the £850. or contacting the bank.

She received a letter from NatWest in July 2008, following a meeting with NatWests Credit Management Services, (Telford) as follows ---------

"I confirm that the bank will accept the repayments of £1000.00 per month for the next six months.
The Terms are as follows.
The bank is to be repaid in full by the 31st Dec 2008
Should you fail to maintain the payments as detailed above, you will be in default of this agreement and the bank will look to enforce the possession order" end quote.
She has paid the £1000.00 payments as agreed.(Jul Aug Sep 08)

My daughter cannot repay the loan (£75,388.00) in full by Dec 2008, although she could pay the £1000.00 per month.

NatWest gave no reason other than "increase in base rates" why they increased her repayments by £348 per month, and It was that increase which caused my daughter to default.

Her objective would be to pay the loan in full, and she could afford another loan/mortgage of up to £1000.00 a month. but no one will give her that option.

The business is a going concern, she does men and ladies, she has recently re-furbished the whole shop, this was probably the wrong thing to have done, especially while not paying the monthly repayments. She takes on average £1200 a week, but things would have to change, I believe she is overstaffed, and could open on Sundays, so there would be changes, if she could keep the property.
She wrote asking for a meeting with NatWest, but they declined, by saying a meeting would not be appropriate.

She lives in two rooms above the shop, but has applied for a council house. The property is rated as "commercial"

Any suggestions as to what action could be taken, I have suggested I would go with her to NatWest, and insist on a meeting, but whether this would do any good, if she has defaulted, then NatWest say they can call in the loan.

Please do not hesitate to ask for further information, if you think it would be beneficial.

Thank you for your interest. Razor

[Guest]

Re: Nat West, Loan recall

I think it would be beneficial for you to press harder for a meeting with the bank. I can see no reason why they would refuse, provided that you tell them why you want the meeting, which is to agree a repayment schedule that is acceptable to both parties. At present, the bank want the money in less than three months and your daughter wants to keep the property and repay the loan over a longer and more realistic time frame.

Was this a commercial loan and if so, do NatWest also operate the company bank account?

If your daughter can pay £1000 per month, yet the required payment has risen to £1200 per month then she is still short-paying the loan. They may well ask that she pays more than this so what are the chances that she can do so?

I believe that if you can offer a sensible repayment proposal, coupled with assurances that no further defaults will occur then NatWest may be willing to extend their deadline for repossession. This will very probably be based on no further missed payments and regular reviews where your daughter will be expected to increase the payments.

All banks are becoming increasingly risk-averse, which some might argue is something they should have done a long time ago, but nevertheless, they are going to be very keen to ensure that no further payments are missed and that the loan account is conducted under strict conditions from now on. This may be the last chance your daughter has to keep the business going so it is essential that any repayment proposals she makes are both attractive to NatWest and realistic for her.

[razor]

Re: Nat West, Loan recall

Hi Cetelc

Once again, thank you for your prompt reply.

I fully agree with what you suggest, and I believe it would be the best option she has left. probably the only one.
It was a commercial loan, and the bank do have her personal,and business accounts.
Now I have her statements,etc, I will ask for an appointment with NatWest, and I will go with her.

Thanks you for your help and advise

Razor

[scoobydoo]

Re: Nat West, Loan recall

It may also be worth looking to se if there is any free small business advice in your area. If she has a plan to maximise her profit on a going concern then they may consider assistance.
------------------------------- merged -------------------------------
try Business support, information and advice | Business Link

[Tools]

Re: Nat West, Loan recall

Hello razor

If I may also add some suggestions for consideration.

You mention in post#3

Q4
Yes, the ground floor is a Gents/Ladies hair salon, upstairs there is a Tattoo room, (she rents the room out) and she lives in the other two rooms.The whole property is rated as commercial.

Is it viable that she can pass on an increase in the rent to the Tattoo Studio?
Is there any contract that has fixed the rental rate to them for a specific period?
How is business at the Tattoo Studio, in your opinion could they themselves absorb an increase in rent without risking her losing that rental income?

You also state in post#5

The business is a going concern, she does men and ladies, she has recently re-furbished the whole shop, this was probably the wrong thing to have done, especially while not paying the monthly repayments. She takes on average £1200 a week, but things would have to change, I believe she is overstaffed, and could open on Sundays, so there would be changes, if she could keep the property.

Could she reasonably carry on with less staff, especially if she decided to open Sundays?
What would the wage savings be to her per month as opposed to the extra custom she could generate with that employee?

I understand she may be friends with either the Tattoo Studio owners or indeed her own staff, but if she allows the repossession order to continue there will be nothing for any of them, she has to think of this from a business perspective and not on a personal level.

She may also be able to use these suggestions to bargain for a time extension with Natwest

Good luck I hope she is successful

Jules

[WendyB]

Re: Nat West, Loan recall

Hi Razor

Sorry to ask what may be a stupid question, and maybe the answer is obvious and i've just missed it. But.....

original loan agreement you say states 180 payments. This would equate to 15 years. (180 divided by 12) But if the loan was only taken out in 2002, this would mean repayment by 2017, would it not? Not 2014 as stated in the letter from natwest about hiking the payments up to repay by the date intended. So why has is suddenly got to be paid by 2008? Why has the originall term changed? Is it because she has defaulted?

Please forgive me gang if I am completely missing something here:tinysmile_grin_t:

[Sapphire]

Re: Nat West, Loan recall

Can I interject here please. Razor it might be worth getting your daughter to do 2 income and expenditure forms, one for the business and one for her personal stuff.

We might be able to suggest a few savings along the way to make things easier for her.

[razor]

Re: Nat West, Loan recall

Thanks everyone for your reply's, WendyB, you have nailed it, I think that's how come NatWest increased her repayments by £400/month. they shortened her repayments by over three years, surely they can't do that.
My daughter has been trying for 2 days, to arrange an apointment with a business manager at NatWest at her local branch, with no joy. So I rang, asked for an apoinment, as a new customer, and with an hour, NatWest rang me and made an appointment, I did then tell them why, so we do now have an appointment.
If we can get her loan back on track, then I can sort out her business.

Thanks for everyone's advice. well done.
Razor

[WendyB]

Re: Nat West, Loan recall

Pleased to be of help Razor. I'm sure someone will be able to look into the legalities of shortening the term. I'm not an expert on credit/loan agreements etc, (just pretty good at maths lol) but I'm sure someone will be able to advise. When you've been to the appointment, let us know what happens, and if you could possibly post up a scan of the original agreement and its terms and conditions etc we can move forward from there.

[razor]

Re: Nat West, Loan recall

I have checked my daughters letters from NatWest, and they have definitely stated that her loan repayments had to be increased, as the loan would not be paid off by May 2014, that is 38 months earlier than the original agreement,

At our forthcoming meeting, I will give NatWest the chance to explain this apparent error, and see what explanation they can come up with. If their explanation is unsatisfactory, could we claim that that NatWest are in default of the agreement, in making an unreasonable claim?.

I'll post an update after our meeting with NatWest next Tuesday

Thanks for all your help. Razor

[Amethyst]

Re: Nat West, Loan recall

If they have shortened the repayment period on the loan without agreement from your daughter and without prior notification then yes I would say its a breach of the contract but you would need to look carefully at the T&Cs of the loan to see if thats a variation thats catered for, however then you could possibly look at it as an unfair term.