Interest only mortgage ending

bassguitarist

Hi all
we plan to pay off our interest only mortgage by selling our house. I am now not so confident, in the current environment, that it will sell before the term expires. What happens when the term expires?
Will the bank ( halifax ) levy fines / fees? How long will they wait for the house to sell before they get ' heavy ' ?
thanks

Thrugelmir

When does the mortgage term end? Have you spoken to the lender? 

blue_max_3

I wonder if you can apply for a mortgage holiday? It may buy you a few months.

dunstonh

What happens when the term expires?

You don't let that happen.  You contact the lender before the redemption date and tell them your plans and confirm the property is up for sale.

Will the bank ( halifax ) levy fines / fees?

If your payment history has been good and it remains affordable, the lenders will usually extend the mortgage for a period to allow the sale to complete.   You would continue paying interest.

How long will they wait for the house to sell before they get ' heavy ' ?

It depends on the scenario and how up front you have been with them and the house price being reasonable.

Generally speaking, you should put the property up for sale around 12-18 months before the redemption date on the mortgage.   If its a high value property, then maybe 2-3 years before.   You should not leave it until last minute. 

Trudie1955

Hi
I have an interest only mortgage which ended on 28th June, I have contacted the lender (Birmingham Midshires) who have given me time to get Independent Financial Advice - and they have indicated I must put the property on the market.
I have made a claim for mis-sold mortgage which I am waiting to hear about.
In these Covid 19 times I am not sure how easy it will be to sell the property. I am nearly 65 yrs of age.
Any information or help would be appreciated.

dunstonh

I have made a claim for mis-sold mortgage which I am waiting to hear about.

Don't hold your breathe on that.    The uphold rate is single digits and even then the FOS position is generally to tell you sell the property and if you have made a loss then the firm that advised on the mortgages would have to pay the your loss.  However, if you have profited (by a gain in property value), then there is no redress to pay.   The most common response is that interest-only mortgages were allowed and acceptable prior to the credit crunch.

This also assumes that the mortgage was bought via an adviser and after October 2004.    If you bought the mortgage before that date then it pre-dates regulation.  If you bought via a lender directly then most of these were non-advised prior to credit crunch.  The rest can often be timebarred as lenders have been warning people each year about needing a repayment vehicle for over a decade. They can trigger the 3 year timebar clock.

In these Covid 19 times I am not sure how easy it will be to sell the property. I am nearly 65 yrs of age.

The lender will give you a reasonable length of time.  The housing market is moving again.

Majoggy

This happened to my mum. She completely buried her head in the sand and only told us she even had a mortgage on her property once it had expired. Turns out she had done some extremely foolish things and lost a heap of money years prior without telling anyone.

The bank were pretty decent about it, it took two years to sell and they were fairly understanding.

davidmcn

Trudie1955 said:

In these Covid 19 times I am not sure how easy it will be to sell the property.

For similar reasons, the bank is hardly likely to be keen to repossess it.