From: Ronald Raygun 
Subject: Re: Mortgage Mess
Newsgroups: uk.finance
Date: Sun, 03 Aug 2003 08:38:48 GMT

Rhoy the Bhoy wrote:

> "Ronald Raygun"  wrote
>> 
>> The deal between you and the lender is that you must repay the loan
>> when the time comes.  The fact that (presumably) the same person
>> who sold you the loan also sold you the pension is purely
>> incidental.
> 
> Yeah, right.

Ach, away, you doubting Thomas.

Look, bhoyo.  Typically what happens is that some salesman (sorry,
financial adviser) puts together for the borrower a package consisting
of two or three components which are completely independent in the
sense that they are provided by totally different companies.  The
two components are (1) an interest-only loan from a lender, usually
a bank or BS, on which the borrower must pay interest but need not
repay the capital until after an agreed very long time, and (2) a
repayment vehicle or savings scheme, such as in this case a pension,
designed to save up enough money to repay the loan capital by the
relevant time.  The optional third component is life insurance to
repay the capital should the borrower snuff it, so that his dependants
won't need to worry about being kicked out of the house.

The OP has confirmed that in this case there are three companies
involved because he said the pensions and insurance companies told
the lender that the premiums have stopped coming in.

>> There is no assumption that the pension must be the only source of
>> dosh from which the loan is to be repaid, or even that, had you in
>> fact kept up the pension payments, that it will be sufficient.
> 
> As if ...

As if what?  That's what happens.  The lender cares only that it
will get the capital back in due course, but doesn't care how.
It may take an interest in how, just for peace of mind, and so
likes to be kept informed, but at the end of the day, it just wants
to earn interest and to be sure the money will be repaid in the
fullness of time.

>> > What happens if I claim to have been given bad advice?
>>
>> Everyone around will fall about laughing.
> 
> I won't.

Suit yourself.  It is funny though how people claim they were
mis-sold despite being told in no uncertain terms that there are
risks involved, and that having judged those risks to be suitably
negligible, but years later realising that they may have built
their house on sand, they wish somehow to pin the blame on someone
else.