How to get out of a mortgage (3 key tips)
There are various ways to get out of a mortgage. In this guide, we will cover the two main ways to get out of a mortgage.
how to get out of a mortgage
- pay off the mortgage
- sell your home
- borrow to pay off the mortgage
- borrow from family
Pay off the mortgage
The first way to get out of a mortgage would be to pay off the mortgage. This will involve getting a redemption statement from your current mortgage lender with the amount owed and then paying this off. Your mortgage lender will usually inquire to see where the funds you have used to get out of the mortgage have come from.
sell your home
Another way to get out of a mortgage will be to sell your home and use the proceeds from selling your home to pay off the current mortgage lender and get out of the mortgage.
This method of getting out of a mortgage is only possible if your mortgage balance is less than the property value. If your mortgage balance is more than the property value then you are in negative equity and this means after you sell your property you won’t have enough money from the sale to pay off your mortgage.
borrow to pay off the mortgage
If you don’t have the funds to pay off your mortgage and get out of the mortgage you could potentially borrow from another mortgage lender to pay off the mortgage and get out of it. This is known as remortgaging.
In this case, you get a new mortgage lender for your property, usually at a better APR or due to the fact that you were able to release some equity.
Your new mortgage lender will pay off the old mortgage lender and in essence, you have gotten out of a mortgage.
borrow from family
If You don’t have the money to get out of a mortgage by paying it off early and you don’t have the mortgage affordability to borrow from a mortgage lender then you will likely not be able to get out of a mortgage without the help of your family members or friends.
Your family members or friends could borrow you the money you need to get out of a mortgage by paying the mortgage off early.
When paying a mortgage off early you should be aware of any early repayment charges the mortgage lender may have on the mortgage.
If you have a joint mortgage and you are trying to get out of a mortgage then the mortgage lender will only let you out of the mortgage if the other borrower or borrowers can afford the mortgage on their own.
When you request to be removed from the mortgage, the mortgage lender will carry out an affordability test on the remaining borrower(s).
If they fail the affordability test then the mortgage lender may not let you out of the mortgage and you will still be jointly liable for the mortgage repayments.
If the other borrowers pass the mortgage affordability test then you could simply request for them to buy you out of your share of the mortgage and then consent to be removed from the mortgage.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.