Savings used as a lien over mortgage

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Art

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I took out a mortgage on a property in March 2007 and the bank insisted that I would have to lodge savings of 125k with them which they could use as a lien on the mortgage in the event that I would not be able to make the mortgage repayments. I clearly remember querying this at the time and being told that the lien would be reviewed after 2 years and that in the event of mortgage repayments being met in full that I should have no difficulty in withdrawing the savings.

Roll onto March 2009 when I wished to withdraw some of the savings. I spoke to the official whom I dealt with at the time of taking out the mortgage and she point blank denied having said anything about there being a 2 year review and said that I would not be able to access the savings until the mortgage was paid off - which will be 23 years time. There is no way I would ever have agreed to this and as I say I clearly remember being told that there would be a two year review. Does anyone have any advice as to what I should do in this situation?
 
review all your original loan documentation for any conditions which stipulate that the loan is conditional on a lien being granted on the 125k savings, review all aspects of this to assess what specifically you agreed to. If the lien is not explicitly confirmed as being for the full term of the mortgage then IMO you should be able to access your savings. Get all relevant facts together before you approach the bank again. Good luck .
 
I have checked this already - on the loan agreement it does say that the lien will last for the duration of the mortgage. I should of course have queried this at the time but instead relied on the official's reassurance that it would be reviewed after two years and would be okay to take out the monies then provided that I hadn't defaulted. Now she is saying that she never said any such thing which makes it a case of her word against mine.
 
You might have to re-mortgage with another provider so you can get away from this very restrictive clause. What kind of mortgage product and rate are you on?

And why did you agree to such a restrictive clause, bad credit rating?

But you should try to talk to your bank again..
 
Thanks for the replies.

I am on a tracker mortgage so don't want to remortgage as I would end up on a variable rate elsewhere. I was under serious pressure to close the house at the time and needed the funds quickly - it was a massive mistake in hindsight - it has caused me untold stress in the meantime as I need to access the savings. I have tried speaking to a number of different people in the bank - all to no avail.
 
I would say that anybody who has substantial deposits in the same bank as their mortgage should be very careful lien or no lien. In the event of someone losing their job and having say a 300k mortgaga and a 100k deposit I wouldent put it past the banks to freeze the deposit.
 
HighFlier said:
I would say that anybody who has substantial deposits in the same bank as their mortgage should be very careful lien or no lien. In the event of someone losing their job and having say a 300k mortgaga and a 100k deposit I wouldent put it past the banks to freeze the deposit.
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I don't think the bank can actually do that.
 
Art said:
Thanks for the replies.

I am on a tracker mortgage so don't want to remortgage as I would end up on a variable rate elsewhere. I was under serious pressure to close the house at the time and needed the funds quickly - it was a massive mistake in hindsight - it has caused me untold stress in the meantime as I need to access the savings. I have tried speaking to a number of different people in the bank - all to no avail.
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You need to kick up a right fuss about this if you need access to the funds. There must surely be some compromise here - maybe they will give you access to half the funds?

Worth talking to the Financial Regulator? Dunno if they can help.
 
Yes - I was thinking about that alright. Who would be the best person to talk to? Would it be the financial regulator or the financial ombudsman?
 
Art said:
Yes - I was thinking about that alright. Who would be the best person to talk to? Would it be the financial regulator or the financial ombudsman?
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Try them both I would say.
 
What interest rate are you getting on your 125k savings that they wont let you touch for 23 years!?
 
I agree with Aristotle apart frmthe lien the bank hasnt got the general right of offsett for the mortgage and the savings.
Have you any leverage with the bank? e.g other business you can threaten to move or political connections? Any evidence, of the time limit on the lien (no matter how flimsy would help your case) March 2007 lending conditions were near the loosest, can you prove that you would have met their lending criteria without the lien?

IMO causing a large fuss with the bank may be your best option short term to get some/a prtion of the savings released.
 
Hi

I'm just wondering if Art had any success with the mortgage provider regarding the removal of the lien. We are in the process of trying to secure a mortgage and the lender has issued a Loan Offer of X subject to a lien of x amount of savings which they recommend we have on account in their institution.

We were initially advised that this lien on our savings account would only be for one year, after which time it would be lifted provided all mortgage repayments were made during that year.

However, when I received the Letter of Lien and Set Off, I refused to sign it due to it being generic; not documenting the timeframe; and also as it included a statement which authorised the lender to "set off and apply such monies or any part thereof from time to time in or towards satisfaction of such liabilities entirely at their own discretion without further notice to the effect that such set-off will be a good and valid discharge of such liabilities without the necessity of any further endorsement or authorisation from the undersigned whatsoever"

I contacted that lender and asked that the specific terms and conditions of the lien on my savings account in relation to my loan offer and the time-frame of 1 year be put in writing. But my request was met with much resistance and the Mortgage Adviser denied stating that the time-frame was one year, as was initially explained to my partner. I still persisted with my request of further documented terms and conditions of the lien and how they applied to my case.

I was advised that I would receive in writing the following - "what a lien is, what the terms and conditions of a lien are and how (if ever) a lien may be used or how (if ever) a lien may not be removed"

Are the lending institutions permitted to do this?




 
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