End of Term Mortgage

andrew_bott

Hi, I currently have 2.5 years left on an OI mortgage.  I have been overpaying for 3 years and currently have circa £75k to go.

By continually overpaying I should have a zero balance in 2.5years.  My question is, with increased rates my overpayment isn’t stretching quite as far so therefore I am wondering what happens if I have a £20k balance left at the end of my term?  Midshires don’t offer new residential mortgages and I don’t want one either.  For that sort of balance what are midshires likely to do?

housebuyer143

andrew_bott said:

Hi, I currently have 2.5 years left on an OI mortgage.  I have been overpaying for 3 years and currently have circa £75k to go.

By continually overpaying I should have a zero balance in 2.5years.  My question is, with increased rates my overpayment isn’t stretching quite as far so therefore I am wondering what happens if I have a £20k balance left at the end of my term?  Midshires don’t offer new residential mortgages and I don’t want one either.  For that sort of balance what are midshires likely to do?

If you don't repay it at the end of the term and the term can't be extended then they will repossess the property.

If you get to that though you would be best to take out a personal loan to pay it off.

silvercar

housebuyer143 said:

andrew_bott said:

Hi, I currently have 2.5 years left on an OI mortgage.  I have been overpaying for 3 years and currently have circa £75k to go.

By continually overpaying I should have a zero balance in 2.5years.  My question is, with increased rates my overpayment isn’t stretching quite as far so therefore I am wondering what happens if I have a £20k balance left at the end of my term?  Midshires don’t offer new residential mortgages and I don’t want one either.  For that sort of balance what are midshires likely to do?

If you don't repay it at the end of the term and the term can't be extended then they will repossess the property.

If you get to that though you would be best to take out a personal loan to pay it off.

They would have to go to court to repossess, something a judge may not agree to. In practical terms, if you need a few more months there is little a lender can do as it will take that long to get to court. If the amount is small then a judge may not grant repossession, though a personal loan may be possible. 

Annisele

Why don't you want a new residential mortgage? (I'm just wondering if your objection is about something that it would be possible to overcome.)

If you have a realistic plan to pay off the remaining balance within a few months, chances are your lender won't do very much - probably just stick you on SVR and wait for you to finish paying it. Worst case they'd take you to court, but sounds like you'd probably have finished paying it off by the time the courts got round to you. That case wouldn't be great for your credit rating, but if you don't need a mortgage anymore anyway that might not be too much of an issue for you.

If you know now that you're going to struggle to repay, could you try asking your lender if it would be willing to extend the term for a year or two?

andrew_bott

Thanks.  I just don’t want to get into another fix term mortgage.

By the end I will have been overpaying for 5.5 years so I presume they will see that I have the ability to pay the remainder (if there is any) off within a short time period.  It’s just to give me an idea of what Midshires might do.  I presume they can’t repossess on day one?  Would extended it affect my credit rating?

MWT

andrew_bott said:

I presume they can’t repossess on day one?  Would extended it affect my credit rating?

No, there is a legal process to follow, so they don't get to throw you out on day 1, but yes it will affect your credit rating as you are in breach of the agreement as soon as the mortgage reaches term and you fail to pay it off.

Ideally get it down as far as you can then look at your options to borrow elsewhere to cover the shortfall.

I would not depend on Midshires doing anything other than insisting on getting paid and following due process for that.

That can result in their legal costs being added to your mortgage balance, so really much better to figure out a way to pay it off than it is to hope for forbearance.