Large lenders claim right to repossess homes for non-mortgage debts

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Six of the top ten lenders  say they use ‘all monies charges’ in residential mortgage documents, letting them repossess homes if borrowers struggle with non-mortgage debts. 

All monies charges are little-publicised and poorly understood, even by mortgage brokers and other industry experts.  

The charges give lenders the right to secure non-mortgage borrowing, such as credit card debt, on mortgaged properties. 

The clauses of all monies charges are generally not contained in lender’s core mortgage paperwork but are written elsewhere, such as in conveyancing documents.

Mortgage Strategy research has found that Barclays, Santander, RBS, HSBC, Yorkshire Building Society and Virgin Money use all monies charges. 

The remainder of the top ten mortgage lenders by size (Lloyds Banking Group, Nationwide, RBS arm NatWest, Coventry Building Society and TSB) do not use the charges. 

John Charcol senior technical director Ray Boulger says all monies charges are not well understood and are often discovered too late in the mortgage process for consumers to do anything other than accept them. 

He says: “It’s the sort of thing that you won’t see in the standard mortgage conditions. If you look at lender criteria, it will never tell you whether there will be an all monies charge or not.  

“In many cases you wouldn’t know about it until you got the mortgage offer. By that stage you are likely to be fairly committed, and if it’s a purchase you are unlikely to have time to reassess.”  

Other brokers also say there is a low level of knowledge about the clauses among consumers and intermediaries. 

Chadney Bulgin mortgage partner Jonathan Clark says: “As an adviser for almost 30 years, I can honestly say that I had not come across this until now.  Although lenders are telling us that they rarely, if ever exercise such an option it will understandably still concern many borrowers.” 

Boulger and Clark say that if consumers are worried about the charges then they can spread their borrowing among different lenders. 

HSBC example

An HSBC all monies charge says a mortgage “will cover all and any debt you have with HSBC and it is not just limited to the amount of your mortgage debt”.

It adds: “The debt may include overdrafts, loans, credit cards or money due under any facilities that HSBC has granted to you or grants to you in the future. They may also include any liabilities under any guarantee or indemnity that you have given, or may give in the future or for liabilities incurred by HSBC on your behalf.

“If any of the debts and or the other liabilities are not paid when due, HSBC can take possession of your property and other assets, sell them and put the money from the sale towards the debts and/or the other liabilities.”

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  • Peter Turner 10th October 2017 at 4:11 pm

    How exactly do they argue that this is clear, fair and not misleading?

    The advice to any client that they threaten to do this to seems to be make an immediate regulated complaint.

  • Chris Hulme 10th October 2017 at 1:20 pm

    This is nothing new in the industry. AMC’s have been part of the legal process for some lenders for years but is perhaps a little used tool in debt recovery. The answer for consumers (other than avoid using lenders that use AMC’s) is to take unsecured borrowings from lenders other than their mortgage lender – in that way the charge cannot be applied to those unsecured debts.
    Even this though may not prevent High Court Enforcement from taking control of assets that could include property assets such as houses should such debt recovery processes be needed by an unsecured lender.