Paying Lump Sum off Mortgage

cathalbrophy

Hi,

I bought a house a little over a year ago - really regretted it since and recently put it on the market. My mortgage was for 200k (had 30k savings already for deposit - house cost 230k), current mortgage balance approx 196k.
I have a buyer and i'm fairly hopeful that this will go through - selling for 180k.
Therefore if i want to clear the mortgage i have to come up with approx 16k - and i'm not really in a great position to get a loan for that amount.
Just wondering what would happen if i paid the 180k into the mortgage? Would my repayments come down? Or would i basically have to keep on paying the same amount each month?
Any info would be greatly appreciated, thanks.

safetymanager

The mortgage is a loan for the house so if you sell the house you would be obliged to pay off the mortgage entirely I would think. I'd say talk to the bank, tell them what you want to do and make a deal with them if possible for a loan of 16K at a payment rate you can afford. Surely they would be flexible in the current climate. Well, according to the government they are almost obliged to accommodate you nowadays.

cathalbrophy

Thanks, that's pretty much what i figured.
I spoke with the bank yesterday and while they were very nice and sympathetic, they told me i would have to raise the 16k myself. I'll talk to them again and appeal to their better nature
Thanks for your reply, much appreciated

safetymanager

I think you might need to be a bit forceful with them. Tell them you are giving them the proceeds of the sale and that's all you can get your hands on right now. Make it clear that you can't give them what you don't have and that they need to compromise until your financial situation improves. Basically, they will just have to wait if they don't work with you on this. If they still refuse to help, put your offer in writing and post it to them, registered post, keep a copy of it and sit tight, don't be worrying about it, no court in the land can make you pay what you don't have and are highly unlikely to try especially if you have made the bank a reasonable offer. You need to remember, we have bailed out the banks and now it's their turn to work with us. Good luck.

cathalbrophy

safetymanager wrote: »

... You need to remember, we have bailed out the banks and now it's their turn to work with us. Good luck.

So true. To be honest i was fairly ticked off. If i owed them a couple of million they'd probably write it off! ... Anyway, that's great advice, thanks a million.

safetymanager

I'd like to the hear the outcome if you would post it here, cheers.

cathalbrophy

I will indeed

GetWithIt

cathalbrophy wrote: »

So true. To be honest i was fairly ticked off. If i owed them a couple of million they'd probably write it off! ... Anyway, that's great advice, thanks a million.

In all fairness, from the limited information you've posted, I don't think you can really take the high moral ground.

It's not like you bought in the middle of the boom when many got caught up in the hype. You bought when everyone's eyes were wide open.

Why did you buy last year? It's feels like you were trying to catch the bottom of the market and made a bad call.

You've not given any indication that you're struggling with the mortgage, just that you regret making a loss.

Fighting Irish

cathalbrophy wrote: »

So true. To be honest i was fairly ticked off. If i owed them a couple of million they'd probably write it off! ... Anyway, that's great advice, thanks a million.

:rolleyes:

gigino

cathalbrophy wrote: »

If i owed them a couple of million they'd probably write it off! ... Anyway, that's great advice, thanks a million.

No they would not. I know someone who foolishly bought property for over a million during the boom and they cannot sell it for 200k now, and the bank is coming after them as it was on a personal guarantee....and they are almost suicidal + have had a crap lifestyle for since buying it .


You are lucky in a way you are only losing a relatively small amount of money . It sickens me though to see the boyos who borrowed 100 or 200 million still leading the glamour lifestyle.

cathalbrophy

gigino wrote: »

You are lucky in a way you are only losing a relatively small amount of money . It sickens me though to see the boyos who borrowed 100 or 200 million still leading the glamour lifestyle.

You're absolutely right. I realise that a lot of people have lost an AWFUL lot more than me. I'm not looking for any sympathy believe me, just advice. I know i'll only have made a loss of 50k - in the current climate that might not be a lot but it's quite substantial to me.
I feel really sorry for your friend - what a terrible situation to be in.

quozl

safetymanager wrote: »

I think you might need to be a bit forceful with them. Tell them you are giving them the proceeds of the sale and that's all you can get your hands on right now. .

One problem with that is that you cannot legally sell the house without clearing the mortgage. No solicitor should let you do it and if they do it's illegal. I was in exactly this situation 2 1/2 years ago and had to borrow the difference in order for the sale to be able to go through.

So, you can't tell the bank that they have to accept it.

TBH, I'd be surprised if they wouldn't loan you the 16k balance as a personal loan though. As the value of the house is less than the mortgage they basically are already giving you an unsecured personal loan for the difference already anyway.

I'm interested to hear what they do for you in the end. I hope they do give you the personal loan for the difference, it seems in both your and their interests.

TwoShedsJackson

safetymanager wrote: »

I think you might need to be a bit forceful with them. Tell them you are giving them the proceeds of the sale and that's all you can get your hands on right now. Make it clear that you can't give them what you don't have and that they need to compromise until your financial situation improves. Basically, they will just have to wait if they don't work with you on this. If they still refuse to help, put your offer in writing and post it to them, registered post, keep a copy of it and sit tight, don't be worrying about it, no court in the land can make you pay what you don't have and are highly unlikely to try especially if you have made the bank a reasonable offer. You need to remember, we have bailed out the banks and now it's their turn to work with us. Good luck.

This won't work as the banks hold the deed for the property while the mortgage is still outstanding. They won't release the deed to let a sale go through without the mortgage being cleared at the same time.

RealJohn

I can't imagine the bank will continue to refuse you the loan. Simply explain to them that if they refuse you the loan, you'll be forced to stop paying the mortgage anyway as you can't afford it and then they'll have to go to the expense of reposessing the house and then trying to sell it themselves, presumably for the same price you're getting and making a 16k loss, possibly more.

KM88

RealJohn wrote: »

I can't imagine the bank will continue to refuse you the loan. Simply explain to them that if they refuse you the loan, you'll be forced to stop paying the mortgage anyway as you can't afford it and then they'll have to go to the expense of reposessing the house and then trying to sell it themselves, presumably for the same price you're getting and making a 16k loss, possibly more.

What? He didn't say he couldn't afford the loan.

If you really "can't imagine the bank will continue to refuse you the loan" you are part of the reason we are all in this hole. Start imagining it now.

If I owed you 196k backed by a house you and I know is worth at least 180k, would you lend me 16k, backed by nothing at all, just so I could sell the only security you have?

Get real or quit offering advice.