Want To Give Mortgage Money Back

freeasabird

I took out a mortgage for £45,000 on a 2 year fixed rate that ends in March 2009 to pay off a debt for a relative but I've changed my mind about doing that. I want to give the money back to the building society. Am I right in thinking that there is no early penalty charge (£695.00) if I give them the money back at the end of the term?

As mortgage interest rates are rising, is it wise to give back the money or are there other options like buying somewhere in a much cheaper area (I realise it would have to be considerably cheaper) and renting it out or is the buy to let market a no no? Or should I save the money and wait until the housing market looks even more promising for new buyers.

Thank you in advance for any advice and suggestions.

_Andy_

If it's a fixed rate and you want to pay if off before March then there will probably be a percentage charge for paying it back early - this would have been detailed in yhour mortgage offer.

luckyfool

freeasabird wrote: »

I took out a mortgage for £45,000 on a 2 year fixed rate that ends in March 2009 to pay off a debt for a relative but I've changed my mind about doing that. I want to give the money back to the building society. Am I right in thinking that there is no early penalty charge (£695.00) if I give them the money back at the end of the term?

As mortgage interest rates are rising, is it wise to give back the money or are there other options like buying somewhere in a much cheaper area (I realise it would have to be considerably cheaper) and renting it out or is the buy to let market a no no? Or should I save the money and wait until the housing market looks even more promising for new buyers.

Thank you in advance for any advice and suggestions.

I'm confused. Am I right in saying you used to own your property outright, but borrowed this money on a mortgage to help a relative out. You can get the £45k back (or have saved up £45k) so that you can pay it back once the fixed rate period ends. You now want to know if you pay the full £45k back to your mortgage lender AFTER the fixed rate is over then will there be any penalties?

If thats the question then I would say no, not normally, though there are products out there with extended redemption penalty periods. You need to check your original mortgage paperwor/offer, or call your lender to find out.

2n - You are asking whether instead of repaying the mortgage, you should keep it, and invest the £45k in a Buy to Let property elsewhere along with a Buy to Let mortgage.

If so then it might be a viable strategy as there are bargains to be had out there if you can find a motivated seller and drive a hard bargain. Buy to Let mortgages are getting more expensive and harder to obtain just now as some of the biggest players in the market have either pulled out completely and presumably permanently (Mortgage Express, part of B&B), temporarily (The Mortgage Works and UCB Homeloans, both owned by Nationwide), or have scaled back their appetite for business (such as BM Solutions).

You are probably going to find 75% would be a maximum at reasonable rates, with 60% being more likely to get a competitive rate. e.g. £45,000 would provide a 40% deposit on a £112,500 Buy to Let purchase.


Hope this helps,

Joe

MarkyMarkD

I think that you are right that the £45k is secured on a previously unencumbered house.

But I think the OP intended to buy a house, to let, for £45k - not with an extra BTL mortgage, but with the £45k alone. That's why they said it would have to be in a cheap area.

freeasabird

Please accept my apologies, I haven't explained the situation very well. I moved into my mum's house and took out a mortgage on the property for £45,000 with the intention of paying off a debt that my mother owes. The debt is due to a £40,000 demand for repairs to the block of flats my mother lives in. She is retired and couldn't afford to pay a mortgage. Unfortunately my mother has proved to be less than transparent about her financial circumstances. She took out a small loan at a very high rate without telling me, she has no life insurance and no will and has no intention of dealing with these issues. We've nearly reached the point where the money has to handed over to the council and I'm getting cold feet.

My options now are to:

Pay the money to the council and negotiate a new mortgage when the old one has finished. Therefore accepting that I want to remain in this property with my mother as the joint mortgage holder.

Give the building society the money back and let the council take the debt (with interest) when the flat is sold or in the event of my mother's death.

Use the money to put towards another mortgage for my own property or leave it in the bank until the housing situation improves.

My mother is reluctant to sell the flat so I could be stung for more money if any more repairs are made to the block.

MarkyMarkD

You can't, realistically, use "the money" towards another mortgage. You don't have any money in this property - you have a debt. You won't get another mortgage whilst owing £45k on a house you don't live in and on which you receive no income.

If you have taken a share in the ownership of your mother's property - and I presume you have, in order to take out a mortgage - IMHO you can't simply walk away and leave her to it.

luckyfool

1. You pay for the repairs and stick it out.
2. You repay the mortgage in full, come off the property deeds and presumably the council take a charge on the property to be repaid when it sells.

Your option 3 - bolting with £45k you borrowed against your mum's property and using it to buy yourself something seems . . . how can I put this ... slightly sleazy?

Dustangle

Discuss your options with a solicitor, not unqualified people off the internet.

freeasabird

Dustangle wrote: »

Discuss your options with a solicitor, not unqualified people off the internet.

You are right, I should do that. I realise now that £45,000 has been borrowed against the property: it's not a loan based on my salary (although my salary will be taken into account to work out whether I can make the payments) so I can't redirect the money to use for another purpose.

I have no intention of profiting from this situation. I've spent a lot of time trying to sort out my mother's financial affairs and just when everything looks ok, she gets herself into another situation that I usually have to deal with at the eleventh hour because she has failed to disclose just how serious the matter is. I have life assurance, a pension, the mortgage will be paid if I get run over by a bus and some savings. My mother has no life insurance, no will, one loan that I know about and some savings. If I die tomorrow, she will be financially secure because I have ensured that she will be ok. The assumption from two of the responses is that I can run off but I've always had to be the responsible for my mother. That will not change.