Is your loan on your property always fully paid off at the end of the mortgage agreement? UK?

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It is a Together Mort. with Northern Rock -15 yrs-I thought it WAS a repyment mort. but looking at the statements cannot see how it will be paid off in that time.

I am planning on renting out my home, and I believe my mortgage agreement states that I have to live in my home for the first year of the loan, which we have done. My question is, what happens if someone was to rent out their home and this was against the contract? What action can the mortgage company take against you?
Thanks spock!

  1. Reply
    Linux OS
    April 29, 2011 at 9:39 pm

    No, not always. Only if you have a repayment mortgage. If you have an interest only or an endowment mortgage then you will still owe money at the end.

    For more advice, go to your local bank or building society who will be happy to explain about the different types of mortgage.

  2. Reply
    Kyle M
    April 29, 2011 at 10:00 pm

    I am sorry but no. I am a loan officer and in my training they said a loan isn’t always paid off.

  3. Reply
    Spock (rhp)
    April 29, 2011 at 11:00 pm

    the remedies are specified in the mortgage contract — the most likely is raise the interest rate. second most likely is demand additional down payment (which won’t change your payments at all, just the length of the loan).

    they dislike forcing you to rewrite the whole loan though — that costs money.

  4. Reply
    Eric O
    April 29, 2011 at 11:33 pm

    They accelerate the note and make it due immediately. Furthermore, you could be investigated by the FBI for mortgage fraud – this is happening more and more. It’s become more commonplace for the lender to knock on a door to verify owner occupancy after closing- I know it happened to me….probably, in my case, because I was an employee and this was part of an audit. An audit is very likely if there is a late payment or worse default.

    That said, most loans are only based on “intent” to occupy the property as a primary residency. In the case of a conventional loan, they want you to occupy the property within sixty days. That’s not to say you couldn’t get a job transfer or some other circumstance six months later.

    Some lenders, and this may be your case, place additional restrictions of a year or more for owner occupancy. I assume this is to keep people from gaming the system.

  5. Reply
    John P
    April 30, 2011 at 12:21 am

    Usually, if you can prove that you have lived in the property and you can show that you have a reason for moving then there isn’t a problem with you renting out the property.

    What the banks normally look at is your intent, if you intended to live in the property and then something happened that required you to move then there will not be an issue.

    However, if you have not fulfilled those requirements then the bank may require you to pay the note off immediately.

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