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Original poster

what happens when a mortgage ends?

62 replies

KatherineKrupnik · 30/01/2013 14:20

Our mortgage was a 2 year mortgage that finishes in a couple of months. What happens?! Do we arrange a new mortgage to carry on seamlessly or are we expected to pay off what we owe in a lump sum...? (surely not) Presumably we will have to be assessed all over again, can't remember how long the process took last time, but how long should we allow for that so that we do have something in place?

Thanks in advance.

OP posts:

Charmingbaker · 30/01/2013 15:02

Just to reiterate what other posters have said you need to get expert advice ASAP.

Original poster

KatherineKrupnik · 30/01/2013 15:05

Why wouldn't we be able to get another mortgage?? Obviously not the retired person but plugging the other earner details into internet things we could borrow up to 100k?

We could clear the mortgage with other funds but would prefer to re-mortgage.

OP posts:

Original poster

KatherineKrupnik · 30/01/2013 15:07

will call mortgage provider during tomorrow's nap time!

OP posts:

fabulousathome · 30/01/2013 15:08

Well OP you need to hurry up and sort it out, if you only have two months. These things take time to arrange.

I think we are all a little bit surprised that you haven't looked into arrangements for the future yet? I would have been exploring my options at least 6 months before the mortgage term finished.

FunnysInLaJardin · 30/01/2013 15:12

I'm very surprised that your mortage provider allowed you to take a 2 year mortgage without any means to repay the capital. Do you have an endowment policy?

Alibabaandthe40nappies · 30/01/2013 15:12

Well how are we to know your financial situation? Seems very odd that you haven't tried to pay as much off as possible.

CogitoErgoSometimes · 30/01/2013 15:12

If it ends in 2 months time you should either have the capital balance ready to pay your lender or have the same amount lined up ready from another (or the same) lender.

I would suggest you talk to your current mortgage provider fairly urgently. They may like to keep you as a customer (interest only products being highly lucrative) and offer you another deal or they may be able to reassess you for a capital/interest mortgage. You could also shop around other lenders and see if any can offer a better deal. IFAs or independent mortgage brokers can be useful for that.

FunnysInLaJardin · 30/01/2013 15:13

so from what you say do you have the means to repay? I am rather confused tbh

Original poster

KatherineKrupnik · 30/01/2013 15:20

It ends in 5 months. Panic not.

OP posts:

sooperdooper · 30/01/2013 15:24

I'm confused as to how the whole mortgage ends, not just the deal you're on. I always though a mortgage term was for the full period to pay off the amount borrowed, so how was the mortgage only for 2 years if that didn't pay off the amount owed?

Like, our mortage term was for 25 years, but the 5 year fixed rate we were on ended last year and we went on to the srv

NigellaPleaseComeDineWithMe · 30/01/2013 15:32

Sooper - if you hav an IO only mortgage you don't pay off the amount you borrowed the capital - so you will have a lump sum to pay off. IMHO lot's of people have gone with IO and will possibly not have the funds to pay it off. So no doubt people will claim they have been mis sold these products like the endowments which is many cases really weren't!

Reapyments mean you pay off Interest each month and a bit of the capital too - if you get a mort calc you can see how much each month is Int and how much is the capital part - really a good way to incentivise anyone to make overpayments as you save loads of interest and shorten the term too.

NatashaBee · 30/01/2013 15:33

This reply has been deleted

Message withdrawn at poster's request.

CogitoErgoSometimes · 30/01/2013 15:33

Interest only mortgages, by definition, mean you never pay off the capital. So it's like having a credit card at maximum for several years and just paying the minimum each month... it never goes away. When the mortgage ends the lender wants their capital back either from savings or from selling the property or borrowings from elsewhere.

Repayment mortgages... which is what you have sooperdooper.... involve capital and interest repayment at the same time. So eventually you owe nothing.

CogitoErgoSometimes · 30/01/2013 15:35

Guide to Interest Only Mortgages

They can be useful products short-term for various reasons.

MamaGeekChic · 30/01/2013 15:49

How much capital do you have in the house?

noddyholder · 30/01/2013 15:51

You need to repay teh capital

noddyholder · 30/01/2013 15:52

You need to act quickly 5 months is nothing in this scenario. What repayment plan do you have for the capital? I find it hard to believe a bank loaned you money for 2 years only IO without?

Viviennemary · 30/01/2013 16:09

I must say I haven't heard of this type of mortgage either. I know about interest only and fixed term. But at the end of the mortgage period which is in a couple of months you will owe £70,000. I am surprised too that the company allowed you to take out such a short term deal. Be careful you aren't put on to some sort of emergency high interest rate the day after your mortgage finishes.

noddyholder · 30/01/2013 16:13

AT the end of IO the capital is repayable. I don't think this is for real.

Lonecatwithkitten · 30/01/2013 16:13

You are asked will one mortgage company pay direct to another. No not usually there will be a solicitor involved who either you or the bank will choose so that the charge on the property is registered.

You may need a new valuation for a new mortgage company.
You do need to get your skates on, remortgaging with the same company on the same property still took me 4 months last year.

shrimponastick · 30/01/2013 16:19

So, you don't have the capital to pay the lender?

You need to remortgage then. As others have said it can take some time, so you need to crack on.
We have an IO offset mortgage over 10 years.

ArbitraryUsername · 30/01/2013 16:21

I can't imagine why anyone would want another IO mortgage if they had the funds elsewhere to clear the whole thing. They cannot possibly be gaining more interest than you'd be paying on the mortgage. It's just throwing money away.

noddyholder · 30/01/2013 16:22

Most banks now need massive LTV for interest only so maybe look at repayment

Original poster

KatherineKrupnik · 30/01/2013 16:22

Update - okay, no wonder you were all confused as I was clearly totally barking up the wrong tree.

Just called our mortgage provider & our mortgage doesn't end till 2022 - our rate ends & we go onto SVR, just like normal. No idea what I was thinking of, I'm going to blame pregnancy brain when we signed up for the mortgage & sleepless nights since

OP posts:

Original poster

KatherineKrupnik · 30/01/2013 16:25

also, as to the IO thing - we went onto IO because we knew we would have a limited income (one earner household) & wanted to be sure we could budget for our monthly payments. We knew that after the initial 2 years our income would have increased & we would switch to repayment.

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