Can I delay settling mortgage to avoid ERC??

Bananamilk_2

I want to put my home on the market but my fixed rate mortgage deal doesn't expire until 30th September. I'm not making an onward purchase, so my question is: if I sell my property before then and am likely to complete before end of September, is there anything to stop me delaying settling my mortgage by several weeks, in order to avoid paying a hefty ERC?

I'm guessing the flaw to my cunning plan is that the mortgage lender will not release the deeds until the account is fully settled?

Can anyone who knows about these things please tell me whether there is a loophole here or not? Thanks!

lee111s

I think by not being able to complete until the end of September you'll put off a lot of buyers.

Gary123456790

You have to pay off the mortgage when you sell, as otherwise the mortgage company have no security - they wont release their charge from the property until you pay them back, so you cant keep the mortgage without the house.

Gary.

kingstreet

If only putting the property on the market now, what do you think the chances are of you needing to complete a sale before the end of September?

If it's a "normal" area, you may not even have an acceptable offer by then.

All I'd do is explain to any potential buyer that you do not wish to complete until 1 October, or later. Then, it's upto them if they want to proceed with an offer...

As Gary said, you can't sell the house unless your solicitor clears the mortgage at the same time, it's called "unencumbered title" and your solicitor has to provide it, otherwise the sale can't complete.

Bananamilk_2

Thanks for such speedy responses! Yes, I may well be being very over-optimistic thinking I could even complete by end of September. 2 EAs are telling me they are confident of selling my property within 4 weeks, but I know that's just EA flannel!

It sounds like I should go ahead and get it on the market in order to get the Spring/Summer market and then just wait and see. I wouldn't jeopardise a sale by telling a buyer I can't complete until 1st October - unless of course we're getting very close to that date and then maybe I could delay for a couple of weeks maximum...

Sounds like my cunning plan was a bit pants.

StuC75

Point is to be honest & upfront with viewers as to what your onward intentions are. Some buyers not like to waiting to complete, but may be those looking who that would suit (property to sell etc..)..

Would it be something that the estate agents could mention to prospective viewers (so as not to waste peoples time?).

How much is the ERC in £'s? against what you are looking to sell at? (and what is selling in your area)..

If you waited to the ERC expired somebody 'may' offer less than asking then that could lose out on someone offering in the shorted term but with the ERC..

So much of this scenario is hypothetical without a solid buyer..

kingstreet

Bananamilk wrote: »

Thanks for such speedy responses! Yes, I may well be being very over-optimistic thinking I could even complete by end of September. 2 EAs are telling me they are confident of selling my property within 4 weeks, but I know that's just EA flannel!

It sounds like I should go ahead and get it on the market in order to get the Spring/Summer market and then just wait and see. I wouldn't jeopardise a sale by telling a buyer I can't complete until 1st October - unless of course we're getting very close to that date and then maybe I could delay for a couple of weeks maximum...

Sounds like my cunning plan was a bit pants.

TBH a buyer offering in June/July won't be expecting to complete until Sept/Oct, so it's only offers before then you have to worry about.

Bananamilk_2

Thanks Stu. I will be marketing the property at around 200k and it is in Zone 3, SE London. The ERC is currently around £1800. I know its swings and roundabouts really, because what I may lose on the ERC I may make on the house price and vice versa. So maybe other people don't stress too much about paying an ERC.

I'm just worried about timing the sale as it would be very annoying to have to complete a month before my fixed rate deal expires.

Bananamilk_2

kingstreet wrote: »

TBH a buyer offering in June/July won't be expecting to complete until Sept/Oct, so it's only offers before then you have to worry about.

That's a good point, thanks. I need to decide whether I should wait until May to put it on the market or go ahead now. It's really difficult knowing what to do in the current climate - as other posters have pointed out, I could put it on teh market now and not even get any viewings or offers!

Maybe I'm overthinking this and just need to take the plunge...

kingstreet

I'd put it on now and deal with the issue if and when it arises.

Bananamilk_2

kingstreet wrote: »

I'd put it on now and deal with the issue if and when it arises.

Thanks Kingstreet, I think that is what I'll do without any more faffing!:)