Lender recalls funds - is it possible / legal

LilPretty

Good morning all,

I generally read and absorb a lot of information here. last night i read a thread and completely took no notice of the title or poster.

Basically i read - that a lender (bank) can recall your mortgage funds - .i.e. - you have an existing mortgage and for some reason the bank gives you notice that they want the funds back etc

I could have mis-read this - but is it possible?

I vaguely remember the writer calling it a marginal clause or so..

again its for information only..

thanks all

silvercar

If you breach the terms and conditions of the mortgage the lender could recall the funds. Also, there may be something in the T&Cs that allow the lender to give you notice they want the loan back, though this would be for commercial loans eg BTL rather than residential.

I haven't heard of margin clauses on residential mortgages.

dunstonh

Basically i read - that a lender (bank) can recall your mortgage funds - .i.e. - you have an existing mortgage and for some reason the bank gives you notice that they want the funds back etc

Was that an American source or a UK source? The ability to call in your debt for no-reason used to exist in the US (although I dont believe it still does). In the UK, the lender would have to go through the courts and would require them to show a breach of contract (most commonly it is a failure to pay. Although sometimes it can be used for other things, letting your property out without permission).

The UK courts actually give a lot of protection to the consumer for residential mortgages. Commercial borrowing gets a lot less protection and debts can be called in (often indirectly). Again, though, if you are meeting your obligations then that sort of thing is rare.

I vaguely remember the writer calling it a marginal clause or so..

Margin clause is something related to insurance. Not come across the phrase being used on mortgages.

TBagpuss

As others have said, you would need to read the small print for your mortgage, but the short answer is that they would normally only be able to do this if you breached the terms of the mortgage, for instance, by failing to pay, by renting out a property with a residential mortgage, without the lender's permission.
Even then, they would normally give you a chance to rectify the issue first.