Done this before. A mortgage is as close as the man on the street will get to the wonderful world of leverage. Using simple figures, you buy a house for £100k with a £20k deposit. In a short time it goes up in value and it’s now worth £120k. Wow, thinks the average guy, I’ve made 20% on my property. In fact you’ve made 100% on your initial investment - i.e. £20k. If you sold you’d come out with double your money.You’ve just used the mortgage company’s money to make money for yourself. Beware though, leverage works both ways. If the value of your house dropped to say £80k, you’ve lost your entire investment of £20k! And you still owe the £80k you borrowed.
That’s not strictly true. The mortgage lender has a right to their outstanding money back if you default on the loan, but the equity beyond that remains the possession of the owner. So a lender who tried to evict someone nearing the end of their loan period would struggle to get a repossession order from the courts, as there’s likely another solution.
Your mortgage lender can’t claim ownership of anything, all they can claim is the money you owe them. They hold the deeds to the property, but only as security against the sum owed. The property is not theirs. If you have a 50k mortgage on a property worth £300 grand, you’re golden. If you can’t pay the interest on the mortgage, technically the lender can force you to sell, but you still walk away with £250 large in your bin.
I did think this last night, when he said it, hence why I said to him....'unless you sell it' - because I couldn't be asked to argue the point.
They can take you to County Court to seek full immediate payment of the outstanding debt, if you break the terms of the loan agreement. But even then there is nothing to stop you borrowing the money from somewhere else - another mortgage lender, for example - in order to pay them off. Things get a lot more difficult for the borrower when property goes down in value, which was what happened for a sustained period in the early 90s. Loads of first time buyers (I was one) ended up in negative equity, where the property was worth less than the outstanding mortgage. That’s when you had people handing the keys back to the lenders, and walking away. In those circumstances, the lender could sell the property at auction for less than you owed, then come at you for the rest of the debt.
I try to keep a cash only, pay as you go life where possible. Would never get a credit card tbh, don't need one and I know what I'm like with a card. I dont take a cash card out with me, as I don't know what I'm spending and have woken up shocked a few times so don't do it anymore.
6 years and that's if you have had no contact at all, this means no communication, phone calls letters email ect ect. That Martin lewis site should tell you and they have a letter you can send to make it all legal.
