What happens when your buy to let mortgage runs out?

sillyspendy

Hi all,

My husband took out a buy to let mortgage with his father in 2006. In 2016 it is due to end. It is interest only.

The house was bought for £137,500 but is worth 10k LESS at the moment with no signs of improving soon.

Will HSBC just let him and his dad sign up a new contract or do you have to give the house back?

No mortgage payments have ever been missed etc.

I know you will ask why doesn't my husband know this but 10 years ago when he bought this with his dad he was only very young and his dad is now very ill and so we are just wondering what happens without asking his stuff to stress him out.

Thanks

Thrugelmir

Either obtain a new mortgage or sell the property. The mortgage holders will be liable for any shortfall on disposal.

sillyspendy

Is it a simple case of just renewing the mortgage so to speak or would a whole new application take place?

Thrugelmir

New application. No such thing exists as a renewal once the term has expired.

sillyspendy

Thank you so why do buy to let mortgages if interest only have a loan term because it's not ljke anything happens after ten years ie we own it or pay them back?
I know I sound incredibly dense I am just trying to help my husband who is working so hard this week and has not got time to investigate

Annisele

Buy to let mortgages have a term because the lender agrees to lend money just for that term.

It's like if I were to offer to lend you my laptop for a week. I don't expect anything in particular to happen after a week - but I do expect you to give me my laptop back.

Your husband and his Dad owned the property from the very beginning. The bank lent them money, not the house - and the bank doesn't own the house at all. The bank just has "security" over the property. Ultimately, that means that if your husband and his Dad don't pay the money back at the end of the term, the bank can (eventually) take possession of the property.

How much is the mortgage? They might have bought for £137,500, but there's a good chance the mortgage is for less than that. If the mortgage is, say, £60k then broadly they have two choices:

• Sell the property for [whatever it's worth], repay the £60k mortgage, and split the rest of the money between them.
• Take out a new mortgage, with HSBC or another lender, and use that money to pay off the first loan. You might want to talk to a broker about which lender/mortgage product would be best.

If the mortgage is for more than about 75% of the current value of the current value of the house, things are more difficult - and they get even more difficult if the house is worth more than the mortgage debt.

Foxy-Stoat_3

What was the max LTV ratios back in 2006 ? 110%???

Best get more information and report back.

Phil_Spencer

What is the location of the property?

Foxy-Stoat_3

https://forums.moneysavingexpert.com/discussion/5173641

Another thread

getmore4less

Urgent steps.

Mortgage(detail not guesses): Amount, rate, payment, term(exact date), any change points like is this a 10y fix coming to an end but really longer term.

Value: What's the place worth.

Rent : what is the market rent and actual rent with the friend tenant.

Ages: of the owners.

What assets does the dad have, what assets do you have.