To pay off the mortgage or not?

[mslambs]

Hi all,

We have a dilema we are thinking through and hoping for some advice. The mortgage on our apartment is now almost £1000 a month so we are thinking about using all of our savings and remortgaging our own house in order to clear the mortgage and lower our combined monthly mortgage outgoings. So the question we have is:

We haven't yet received the title deeds to the apartment from our developer so wondered where we would stand if we paid the mortgage off but then the developer went out of business. Would the bank own the property as part of collecting debts off the developer or would we still own it?

 

[Veronica]

Hi all,

We have a dilema we are thinking through and hoping for some advice. The mortgage on our apartment is now almost £1000 a month so we are thinking about using all of our savings and remortgaging our own house in order to clear the mortgage and lower our combined monthly mortgage outgoings. So the question we have is:

We haven't yet received the title deeds to the apartment from our developer so wondered where we would stand if we paid the mortgage off but then the developer went out of business. Would the bank own the property as part of collecting debts off the developer or would we still own it?

The thing is that your mortgage is with the bank not the developer so even if you didnt pay the mortgage off the bank could still come after you for the money you owe them.
It would certainly save you a lot of money if you had a mortgage in the UK rather than here as the interst rates are so much lower in the UK.

Incidentally who is your developer?

 

[mslambs]

To pay off mortgage or not

Hi pippin,

thanks for your respone. i dont think i worded my questions correctly. what i would like to know is if we havent got the title deeds and then the developer (Pafilia for us) goes out of business they do we still have claim to our apartment or would a bank have claim to it as i understand the developers often mortgage the land and so might not have paid the bank back?

We are reluctant to use all the money we have plus remortgage our own home to pay iff the mortgage if we dont then end up actually owning it because we havet got the title deeds.

hope that makses more sense!

Look forward to hearing your thoughts

Thanks

Maria

 

[Veronica]

I understood exactly what you mean but my point is that even if the developer was to go bankrupt and the bank took possession you would still owe the bank the whatever outstanding amount is on your mortgage.
However, as long as you have paid your mortgage you would still have a claim to your apartment.
It is registered at the land registry under your name with a specific performance (at least it should be) and that protects your interest.
Although there are a lot of rumours about different developers going bankrupt the general consensus of opinion among those who are in the know is that Pafilia will not go under.
They have enough assets for the banks to support them. They have halted some projects and moved clients to others which are complete or nearly complete. I would think t hat they will eventually restart some of the suspended projects once they have pulled in some more money from the completed projects.

Don't get me wrong, Pafilia is one of the developers we won't touch as we don't like their methods but I don't think you need to worry about them going bankrupt.

Hope that helps you.

Veronica

 

[mslambs]

Great thank you

 

[WhathaveIdone]

Should you pay off your mortgage.

Hi There

I would be very carefull in raising you UK debt to redeem overseas debt. Firsltly what currency is your foreign mortgage in?

if your mortgage is in Euros or swiss France then you should think very carefully. The pound is currently very weak due to the state of the UK economy and the low base rate. Should the Bank of England raise interest rates in order to combat in flation then this should hopefully strengthen the pound. The effect of a stronger pound would be to reduce your overseas debt.

I have a sizeable overseas mortgage and if i did have the cash to pay it off I certainly wouldn't do it at ther moment.

You should check your mortgage agreement and the date on which you drew down funds. The check the conversion rate for Sterling against your mortgage currency. If the pound now buys you less foreign currency then it did then you will find your debt has increased.

if i were you i'd get my head around currency pairings before making any further decisions?



Cheers

Mark.