When my mortgage ends what are the banks likely responses?

alanski_2

Partner and I have a joint interest only mortgage with 170k remaining that ends in 7 years.
We don't have a formal repayment vehicle and certainly don't earn enough currently to switch to repaying it. Without contacting the bank directly - Lloyds in this case - I wanted to hear from others about what the bank does when  the end of the term comes if you still owe on the mortgage. Do they reposess the house and sell giving you the equity? Do they let you extend the mortgage? Do they wait for you sell and pay them back? How reasonable are they? I'd love to hear others experiences and scenarios based on dealing with banks. Tia

Flugelhorn

reading some posts on the forum I think some people are given time to sell the property - suspect it all depends on how much you engage with the bank and agreement you can come to 

chanz4

time to look at down scaling

tacpot12

If they reposses the property, they will sell at auction and you might get a lot less back than you are expecting. It would be better to sell up before the end of the mortgage term so that you remain in control of the amount that the property is sold for. 

Hoenir

Surprised that you didn't receive the letters that were sent to interest only mortgage holders a few years ago. Ultimately how the debt is repaid is in your court. If you don't take action by selling. The bank will eventually force a repossession. For which you'll bear the costs. Better to be proactive. 

400ixl

No one can really answer the question from the information you have given.

For example, if you are at a more senior age then the options would be more limited than if you were younger. With the latter they may allow you to switch to a repayment mortgage. Unlikely they would let you carry on with an interest only, but some may.

What are you trying to achieve may be a better question to put forward.

MWT

400ixl said:

For example, if you are at a more senior age then the options would be more limited than if you were younger. With the latter they may allow you to switch to a repayment mortgage. Unlikely they would let you carry on with an interest only, but some may.

On the flip-side, if they are older they would have some options like a Retirement Interest Only (RIO) mortgage, or Equity Release...

... but I agree, no way to know what is on the table without more information, but the worst answer right now is probably to do nothing, and the best answer may well be to down-size...

user1977

tacpot12 said:

If they reposses the property, they will sell at auction and you might get a lot less back than you are expecting. It would be better to sell up before the end of the mortgage term so that you remain in control of the amount that the property is sold for. 

In my experience the vast majority of repossessions are marketed via estate agents, not at auction. But certainly it should be a last resort to allow the bank to repossess if you can sell yourself - even if the bank achieves the same price you would, they'll be charging arrears of interest, their own charges, their legal costs for repossession, etc.

amnblog

If you reach the end of the mortgage term the Bank will require repayment of their capital. If not by other means, by sale. If you sell and repay them fine. If not they will repossess and sell and you will get less back for sure.

If you reach the end of your term and the Bank can see you are taking steps to repay the capital, they will normally delay any action to give you time to sort the capital repayment out. During that period you will be on the standard variable rate and that can get expensive (currently 8.74% with Halifax making your payments £1,28 pcm).

Therefore, the smart thing now is to get some advice and consider your options.

Jemma01

Question to the other members:
If they repossess the house, would this put OP in a difficult place getting another mortgage? 

Hoenir

Jemma01 said:

Question to the other members:
If they repossess the house, would this put OP in a difficult place getting another mortgage? 

Begs the question why would someone allow this to happen. Given there's 7 years yet. Plenty of time to plan for the future in a constructive manner.