Couple lose £6.9 million buy to let mortgage row with lender

A buy to let couple who challenged a lender’s right to call in mortgages that were in arrears has lost in court. The High Court in London agreed with Paragon Mortgages decision to call in loans worth £6.9 million after the unnamed couple argued the firm should have waited until they were three months in arrears. Their case hinged on this argument - and the fact the account was 2.8 months in arrears when Paragon started recovery action. In court, the couple claimed Paragon had assured them that no action to recover any debts would start until they were at least three months in arrears, but the lender denied making the statement. The judge accepted Paragon’s evidence that no such agreement was reached. The court was told that the couple were professional landlords who had buy to let mortgages totalling £32 million leading up to the credit crunch. Their business ran in to financial problems in 2007 and by August 2008, they had buy to let mortgage arrears of £282,645. They agreed to pay Paragon £50,000 in September 2008, but failed to meet the deadline. As a result, Paragon appointed receivers and applied for court orders to run the properties. In May 2009, the lender called in the loans. A Paragon spokesman said: “We do not comment on individual cases. In rare cases when we are obliged to resolve a matter with a buy-to-let borrower through the courts, it is reassuring to have our position upheld as unequivocally as it was in this case.” • Buy to let mortgage lenders can appoint a receiver of rent if a landlord defaults on mortgage repayments. This lets a tenant stay in a property instead of losing their home. The delay also lets a lender to decide what to do with the property, while setting off mortgage interest against rent.

Landlord blog

Siobhan Smith

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