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Getting back our mortgage deposit

(18 Posts)
goodbyesunhellomoon Fri 16-Oct-09 21:32:55

I'm not sure if I'm being a bit thick or not here but.....

When we took our Interest Only mortgage out we paid 5% deposit of £10k, and the mortgage company stumped up the rest.

I've always assumed that when we sell our house, we get our deposit back and the mortgage company get their money back.

But, on our mortgage statements, in the closing balance section - they say we owe them the full amount. Surely this is wrong? Why would we pay £10k towards our house but then pay it again to the mortgage company on selling the house?

Think I need to ring them monday but have been doing my head in tonight googling the subject (as I've factored in getting that money back!)

Any help greatly appreciated smile

preggersplayspop Fri 16-Oct-09 21:40:18

I'm not sure I understand your question, but if say you bought a £100k house and put down a deposit of £5k, you borrowed £95k and if you haven't paid any capital back when you sell the house you still owe the mortgage company £95k. Or have I got the wrong end of the stick?
You paid the seller of the house £100k, £5k comes direct from you and £95k from the mortgage company on your behalf.
I think this is how it works...

preggersplayspop Fri 16-Oct-09 21:41:48

Or double those amounts in your circumstances if a 5% deposit was 10K - sorry if this confused things more!

Lulumama Fri 16-Oct-09 21:44:55

you can only get back the equity , but you have been paying interest only, so you have not made a dent in the capital, so you owe £95000

you can't get back the deposit you paid

PfftTheMagicDragon Fri 16-Oct-09 21:45:04

Well it depends how much you can sell your house for. If you bought it for 100k and put up 10, and you can sell it for 100k then you should get 10 back and the rest goes to the bank, debt repaid.

FlamingoBingo Fri 16-Oct-09 21:45:24

Yes, pregger's right. You pay a percentage of the house price, not a percentage of the mortgage or that wouldn't make sense.

You buy a house for 200,000 and pay a 5% deposit upfront, which is 10k, so you borrowed, 190k from your mortgage provider. If you're paying interest only, then, unless you've had the mortgage for yonks and have paid off all the interest and then some of the capital as well, then you still owe 190k plus any outstanding interest (or minus any capital you have repaid).

sylar Fri 16-Oct-09 21:45:34

Is it due to a penalty due to redeeming during a discount/fixed rate period? Or is it that you have had closure fees added?

Or have you missed any payments and so you have added interest payments to make which have eaten into your deposit?

Or has your house gone down in value and so your equity has been eroded?

PfftTheMagicDragon Fri 16-Oct-09 21:46:33

You owe the amount that they lent you though, regardless of what you put in or what it sells for. If you ahve paid back no capital and you owe them 90k, then that's what you owe, regardless of anything else.

FlamingoBingo Fri 16-Oct-09 21:46:33

Oh yes and the deposit isn't refundable - it's the bit you pay outright so that the mortgage lender isn't risking so much by lending you the full value of the property, in case its value goes down and they risk losing out if they have to sell it on.

Lulumama Fri 16-Oct-09 21:46:59

not sure where i got £95000 from !

anyway, you have to clear the mortgage when you sell, and if the house has increased in value, teh difference between what you borrowed and the value is the equity, you get the equity back

PfftTheMagicDragon Fri 16-Oct-09 21:49:01

Yes, lulu, I wasn't paying any attention to the actual figures either, I just made them up! grin

Lulumama Fri 16-Oct-09 21:49:33

you confused me pffft !or maybe it was the large alcoholic drink i just had!

goodbyesunhellomoon Fri 16-Oct-09 22:10:01

thanks everyone

I've been really confused about it this evening.

It's a £200k house - the mortgage is £190k.

I reckon we will probably sell it for £200k - from which I assumed, £190k would go back to the bank and £10k would go to us?

I'm sure that's right?

But the bank's mortgage statements say outstanding balance of £200k?

goodbyesunhellomoon Fri 16-Oct-09 22:11:34

...sorry, and no accrued interest or redemption penalties either.

Lulumama Fri 16-Oct-09 22:12:39

surely that means you are in negative equity? you should call them on monday and clarify

if you sell for £200 000 and that;s what you owe you don't get anything

when was the house last valued?

preggersplayspop Fri 16-Oct-09 22:13:42

That doesn't sound right then. You will get £200k from the sale which will pay off your £190k mortgage and the rest is your equity.

I would speak to your bank and find out.

goodbyesunhellomoon Fri 16-Oct-09 22:23:34

preggers that's what I thought.

Will call them on Monday. Thanks anyway smile

preggersplayspop Fri 16-Oct-09 22:27:18

Good luck with it, I'm sure it will be fine. My bank made an error (smaller scale though) when I recently re-mortgaged and fixed it up straight away.

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