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Pensioners attempt to strike deal on self-cert interest-only mortgage

Case moves to mediation as Godiva’s legal costs hit £241,000

Pensioners suing for £400,000 over a self-certification interest-only mortgage have agreed to mediation to try to avoid a full-blown trial.

Norma and Robert Mason began suing Coventry Building Society specialist lender Godiva Mortgages in April 2013 over a mortgage taken out in 2008, before self-cert loans were banned by the regulator.

The case had its first court hearing on 9 May, by which point Godiva had incurred legal costs of £241,000.

The case will move to mediation in September to give both sides a chance to reconcile. If this fails, the case will proceed to a three-day trial.

Godiva declined to comment.

Papers filed at the High Court by the Masons in 2013 say the couple kept up the interest payments on their loan but could not repay Godiva when the loan ended in 2013. They say they are out of pocket, the lender should not have lent to them and it did not check their ability to repay.

But Godiva’s defence says the Masons could sell the property and repay the loan, and the couple’s loss is their fault.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. I am a mortgage adviser and people like this do not help Advisers the lender always asks how will the loan be repaid and it is usually sell of property or remortgage with a lender who offer longer term.

  2. Robert Milligan 16th June 2017 at 1:11 pm

    And Godiva are absolutely right, the term is just that the term so sell the house. If you agree to borrow over a fixed term then you do exactly that,,,,,and yes I to have an interest only loan

  3. Interest only means by definition no repayment of capital, so what did the Masons expect their obligations to be at the end of the agreed term?

    Or did they blithely assume that they’d be able to roll over the loan indefinitely, even though the documentation would almost certainly have included no such suggestion?

    Still, never mind, try it on anyway and in the current climate the FOS may find in their favour. Perhaps the adjudicator’s line of reasoning will be that Godiva is at fault for not having made plainer that at the end of its term the loan would have to be repaid and that rolling it over into a new one wouldn’t be an option.

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