Can a bank revoke a mortgage if there are no late payments?

everestconquered

Dear Forum

I know a bank can revoke its mortgage offer before or even after exchange.

But when a bank gave one a mortgage, which has always been paid in time can they review it on whatever basis and revoke the mortgage, forcing one to sell their house? Or are there any regulations that prevent a bank from doing so (if there were no late payments, no arrears)?

Also, if a bank can do it is there a strict procedure it has to follow (say, through a court)? Or can they do it simply because they have the legal charge and there is a standard small print in every mortgage agreement (is there?) that allows them to do it whenever they like?

Thank you in advance for any feedback!

molerat

In a word no. A commercial mortgage may be a different matter but a domestic mortgage would come under the FOS and unfair contract terms. Only a breach of the contract would trigger the small print.

dunstonh

Lenders cannot call in the debt without justification and the courts would not grant a repossession to someone who is paying their mortgage without any contract breach.

Mortgages are contracts. Both sides agree to the terms. Both sides are protected by the terms.

Thrugelmir

What's occurred for you to ask this question?

ACG

It may help if you put a bit more meat on the bones, but if you are in breach of the terms then yes they can. For example, if you are letting out the property without permission or if you lied on your application for instance.

silvercar

If they asked you to pay back the mortgage and you refused they would have to take you to court in order to get an order to repossess the property. Whether a judge would agree or not depends on the circumstances.

It could depend on the judges view of how serious any breach of the term.

boo_star

There has to be more to this story. A bank can!!!8217;t demand immediate payment on a mortgage unless you breach the contract. So what actually happened?

Nebulous2

We often see people with interest only mortgages, who are unable to repay them at term. Banks then refuse to extend the term. That isn't recalling though. It's simply asking you to comply with what you signed up to.

AnotherJoe

Yes they can if you've breached the contract terms. One of those will be paying on time, but if you've complied with that there are others you can breach, for example letting it out would be a common one.

They might not jump straight to that though, they might just ask you to comply withina certain timescale.

As with all hypothetical questions more detail is needed if this is a real concern and not just the needless worrying of a FTB looking at all possibilities as they nerve themselves up to buy a property.

everestconquered

Thank you all for your answers : )

Many of you say rightly that a mortgage is a contract and paying it back in time is just ONE of its conditions. But where can I see the rest?

It might sound like a stupid question but all I have is my mortgage offer and Variation Agreement, which both refer to some mysterious terms that I can’t find anywhere.

In the offer I read “Enclosed you’ll find some important documents which you should read carefully and keep for reference. Please note that the Loan Terms contain important information about the mortgage contract and how we will use your information”. However, there are no Loan Terms inside. Further on I read “This offer incorporates the enclosed Loan Terms, which you should read carefully.” I don’t know if they confuse customers on purpose but there is nothing named the Loan Terms inside. There are basically two documents: “Key Facts about this mortgage” and Standard Mortgage Valuation. All I can learn from the first one is that they expect me to have a building insurance.

I checked with my solicitor if they have anything else, but they only have their copy of the same.

In Variation Agreement there is only section “10. Non-compliance with the commitments linked to the loan: consequences for the borrower”, where I can read: “We expect you to: • maintain the regular repayments on your mortgage; • make and keep to arrangements for repaying the capital outstanding at the end of any interest-only part of this mortgage; • look after the property and keep it in a good state of repair; and • insure the property using an appropriate policy.”

As I understand it’s not the full contract terms (e.g. there is nothing about letting out a property, which I'm not doing but was mentioned here twice as a typical breach of a contract). Especially, since further on I read:

“Your full obligations are set out in the terms applicable to your existing mortgage and the Mortgage Deed or Standard Security that you have granted in our favour.”

So again, the stupid question from the beginning of this post: where can I find it?

How can I know what is a breach of a contract if I don’t have a contract as such. Unless the mortgage agreement is considered a contract? But than where are those terms it refers to?
Where should I look for them?

ACG

Have you asked the lender?

I am making a few assumptions here, but I am assuming the lender is calling in the loan? In which case I am assuming they have told you why?
If that is the case, why not ask them for where in your contract it states this would be a breach and if they can send you the full contract.