You took out an interest-only mortgage 5 years ago, and now the fixed term is up, and you are unable to refinance or do not wish to keep the property and are looking to sell.
Sadly, you are not alone. According to FCA’s Mortgage Prisoner Review, out of 195,000 total mortgage prisoners, only 66,000 may be able to switch. A wave of interest-only borrowers will see their fixed-term mortgages come to an end who are either too old to re-mortgage or, given unaffordable payment plans, are forced to sell to pay off the debt.
An interest-only option seems very attractive to any homeowner or landlord, as you will only pay the minimum amount. The total borrowed sum remains payable in full at the end of a fixed-term mortgage, which can be anything from 10 to up to 35 years.
Timing is of the essence as the banks can step in and repossess the property to sell it for a profit. Why not sell your property quickly, pay off the bank and keep any surplus equity?
A repayment mortgage pays off capital (the amount borrowed) plus interest. Over a 25-year term, it will be paid off in full, but the repayments are almost double the interest-only payments or higher depending on interest rates.
This article will explore what to do when your mortgage term ends, your options, and what happens at the end of a buy-to-let mortgage term.
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What to do when the mortgage term ends?
If you had a fixed term of 5 years, the interest being charged was fixed. Now that the term has ended, you can speak to your lender and either fix the mortgage term again, depending on your eligibility and repayment history or interest will revert to a Standard Variable Rate or SVR for short, which the bank sets.
It is usually a percentage higher than the Bank of England’s base rate.
Can you sell your house before paying off the mortgage in the UK?
You can sell your house, but the mortgage must be paid first. Most British homeowners have taken out mortgages when buying a house or flat.
As the needs of the family change or due to changes in personal circumstances, you must move home. Once you sell your property, you will have to repay the mortgage along with any early repayment charges, if there are any.
Suppose you have a favourable interest rate on your mortgage. In that case, you can speak to your bank or building society and ask if they will port your mortgage to your new property – this could save you thousands of pounds in early redemption charges, arrangements fees and broker fees. If this option is unavailable, once your property sells, the mortgage will have to be paid off first, and the balance will be returned to you via your solicitors.
What are your options at the end of the mortgage term?
If your fixed-term mortgage has ended, and the bank won’t extend the term due to age or other factors, your only option is to sell the property before the bank forces the sale. The bank can step in and repossess the property if you haven’t been in constant contact with them or given them any assurances regarding the sale of the property.
Be sure to read the UK Government’s guide on selling your home.
Selling a house before the end of the mortgage term is possible. We can help you as we are looking to buy any property. We will make you a cash offer with no deduction, estate agent, or legal fees.
What happens at the end of a buy-to-let mortgage term?
If you are a landlord looking to release equity, perhaps for retirement or put your money into another business, selling your buy-to-let property at the end of its mortgage term may be sensible.
We’ve seen the anti-landlord rhetoric in the media with constant landlord bashing and section 24 tax that has meant landlords have exited the property market in their droves. Being a landlord is a thankless task.
You are not being recognised for providing safe accommodation, a basic human need. Yes, your tenants will have paid your rent, but you also acted as their councillor when dealing with their issues. They forgot their key, fell out with their partner or fell on hard times. You’ve quickly answered your phone in the early hours or at the weekends and sorted out maintenance issues.
As we are landlords, too, we are on your side.
If you cannot pay your mortgage at the end of the term, there’s a solution.
Property Saviour work with landlords who are looking to sell their rental properties. Whether you have a portfolio of buy-to-let mortgages coming to the end of term or a single property, we are here to help. We will make you a cash offer, work with your bank if they are enforcing action and will complete the purchase quickly.
Your property will have cash flowed positively, and now it might be time to take the equity out and re-invest it into another business or use it as a peace of mind fund for a well-deserved retirement.
Are you an owner-occupier with an interest-only mortgage coming to the end of the term?
If you are an owner-occupier with an interest-only mortgage coming to an end and you cannot re-mortgage due to your age or other reasons, we can help you.
By selling your home to a cash buyer, you can release equity which can be used to either buy another property or secure a long-term rental property. You can also downsize if your property has equity.
No estate agents are involved as you will be dealing directly with us, a professional property-buying company with a track record of many satisfied homeowners.
Request a callback today to see how we can help you.
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Can I sell my house during a fixed term mortgage?
Yes, you can sell your home during a fixed-term mortgage. If you need to sell, it is worth speaking to your lender to ensure you can port your mortgage across to your new purchase; otherwise, you may have to pay early redemption charges. These can run into thousands of pounds easily.
What happens when you get to the end of your fixed rate mortgage?
Once you reach end of your fixed rate mortgage, you can remortgage with another lender or phone your existing lender and speak to what products are available.
If you do not renew to another mortgage product, you will move to a Standard Variable Rate or SVR – this is a rate set by your lender.
What happens at end of mortgage term?
At the end of the mortgage term, you are to pay the mortgage balance in full.
This is because you will have been paying interest-only elements of the mortgage and not capital repayment.
The capital or original borrowed sum must still be paid. One option available to you is to sell your property quickly before the bank repossesses it. We can help.
How do mortgages work when you sell your house?
When you sell your house, the mortgage balance, including any fees or arrears, must be paid in full.
Your solicitor will request from the bank a mortgage redemption figure. Once this is paid from the proceeds of the sale, the balance is due to you less solicitors fees.
Can I sell my home before the mortgage term is up?
Yes you can sell your home before your mortgage term is up. Property Saviour can save you the hassle of dealing with estate agents because we buy properties directly from homeowners.
Can I pay off my mortgage at the end of the fixed term?
Yes you can. There should be no any Early Redemption Charges that come when you take out a mortgage. It is always worth checking with your lender.
Should I remortgage after fixed term?
Yes, you search the whole of the market or use a broker BUT if you sign up with a new lender, there may be additional fees such as arrangement fees, broker fees and survey fees.
You can also ring your current lender and ask them what sort of fixed mortgage deal they will offer you.
,The benefit of using this method is that you will save yourself fees. On paper, another lender might offer you better terms but when you add their fees to the loan amount, it might work out more expensive.
Can you move a fixed rate mortgage to another property?
It depends on your lender and whether or not you took out a ‘portable mortgage’. Ask your lender first.
Would You Rather Sell Without The Hassle?
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
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- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
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- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.