Bank insists we pay off whole mortgage

[Cobblersandhogwash]

We have sold some of our land to a house builder. They will build six houses on it.

The bank is insisting on taking all of the money from the sale to pay off our mortgage in its entirety. Our solicitor tells us this is standard practice as the bank wants to protect its security.

The land without planning permission was not worth much.

With planning, it'll pay off the mortgage. But we wanted to do other things with the money.

Is there anything I can do?

[toomuchfaster]

I have no legal knowledge, but surely it's none of the banks business? You need proper legal advice quick.

[PinaColadaPlease]

Yoir current mortgage was obviously granted with the land that you have now sold firming part of the security for the loan. Whilst I understand that it was a big garden in terms of value rather than development land, you have still reduced the value of the asset.

The only think I can think of is if you remortgage but with the new land boundary taken into account. If you can tie the two transactions up then they can both complete on the same day and your new mortgage funds will be released.

[Spam88]

Not sure there is anything you can do OP. We've just remortgaged (so the terms are reasonably fresh in my mind) and there was definitely a condition saying the bank can demand a sum like this is used towards your mortgage. Check your terms I guess but I'd assume that's standard.

[ScreamingValenta]

Of course it's the bank's business. The value of the land will be included in the valuation on which the mortgage is based and six houses popping up around the OP's house will affect the value of the mortgaged property.

I agree the OP needs proper legal advice.

[Dyrne]

Your house is about to be worth much less - it’s not just the loss of the land; it’s the fact that it’s about to have 6 more houses in close proximity. The bank gave you a mortgage secured against the value of the property. As you’ve reduced that value, they’re protecting their investment.

[SoyDora]

How much does the sale of the land (and subsequent building of the additional houses) devalue your house by? I can see why they’d want to recoup their money if your property is significantly devalued by the loss of land and building of the 6 additional properties in its vincinity.

[Blue5238]

Agree with the others there is nothing you can do as the bank want to protect the value of their asset. There is nothing to stop you remortgaging straight after though - either with the same bank or a different one

[OddBoots]

The bank has a legal interest in the property, it isn't a regular bank loan the money is secured on the property, of course they can legally and morally require it back (and go through the courts to get it is you don't pay it). You can keep the equity but that is the only bit that is yours, not the full value of the property/land.

[HJWT]

Same as @Dyrne, you have took value from the property which is owned by the bank till you pay of your mortgage so you have put there investment at risk meaning they want the loan payed of...

[OddBoots]

Sorry, ignore some of my post, I misunderstood but they do have a legal financial interest in it.

[Spinnaret]

You have sold part of the asset which secured the loan. House without so much land will not be as valuable and the loan would potentially be bigger than the value. Seems reasonable to me that the bank want the mortgage repaid. Which matches your solicitor's advice.

[DizzySue]

Yes they can do this as you've sold part of the property the bank owns (through mortgage) pay off the mortgage and then remortgage your house with new boundaries taken into account.

[LittleBearPad]

You can remortgage on the basis of your new boundaries etc to borrow the money you want.

[stucknoue]

You need to pay it off then remortgage with the new boundaries.

[Cobblersandhogwash]

The house isn't worth much less as a
result of selling off this land.

It's also increased in value over the six years we've been here.

Thank you all so much for your insights. Very much appreciated.

[Cobblersandhogwash]

It's fine. We will remortgage once all the deal is done and dusted.

[DustyMaiden]

There are many places you can get another mortgage. In all likelihood with your existing bank.

[Spinnaret]

But once it has six houses in the garden or PP for them, it may decrease in value again. Quite a few people round here have sold off parts of gardens like this and then really struggled to sell their house. And ended up selling for way less than originally listed.

[makingmiracles]

I may be being dim but, why would you not pay off your mortgage in its entirety if the sale of the land allows you to be able to do so?

[Dyrne]

OP of course it will have decreased in value! It’s not just “a bit less land” - it’s the fact you’re going to have a housing development in close proximity!

[Bluntness100]

I'm afraid I also don't understand how the house will maintain its value with less land and six houses in close proximity. Have you had an agent round to say what they think thr value will be when it's done and dusted?

[00100001]

I would pay the mortgage off!
I'd be £900 better off each month!

[Cloudtree]

The OP has taken legal advice. Her solicitor has explained to her why this is happening and that its normal practice.

[ZuttZeVootEeeVro]

We don't know the size of the op garden, the new houses might not be in close proximity to her house.

Your best bet is pay off the mortgage and then remortgage with the new house value.

[InceyWinceyette]

Blimey, did you sell at the basic price?
There are ways to profit from the value of planning permission even if you are not taking all the risk.

But yes, you have changed the property that the bank has as security.