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taking out mortgage on inherited property
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# 1
Must.stop.spending
Old 17-11-2012, 1:39 PM
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Default taking out mortgage on inherited property

I have inherited a house worth approx 250k which i currenlty let out for 1200 per month which is mortgage free.

the property i live in at the moment has a mortgage of 134k and is worth about 145k. I have 6k of mortgage arrears on top of the actual mortage balance.

Is it possible to take out a 30k mortgage against the house over 20 years with a bad credit rating?

the 30k would clear all our debts (inc mortgage arrears) and leave us with one payment per month which would also be alot lower (745 per month on unsecured debts atm)
i know secured debt means longer repayment and more interst but we would be planning on selling the house in say 2 years therefor clearing the mortgage..

hoping by doing the above we can take control of our debts by putiting them in one place, my credit file will recover (all my defaults and 1 ccj will be 6 years old in 1 year 15 weeks!) and we will eventually be able to sell the house and use the cash to buy another property.

im not keen to sell the house yet as we can not get another mortgage to buy a bigger place and i worry about the 200k sitting in the bank plus whilst its rented its earning me money!

wondering what type of rate i would be looking at with a ccj and 3 defaults. my mortgage arrears are not showing on any of my credit files which i find odd?
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# 2
marathonic
Old 17-11-2012, 1:49 PM
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Are you working? If so, live on your salary and use the 1,200 per month strictly for debts.

Contact all the people to whom you owe money and ask them all what the minimum monthly payment they would accept in order to clear the debts.

Then list your debts in order of decreasing interest rates, with the most expensive at the top.

Whatever's left over from the 1,200, put the whole lot towards the most expensive debt. When that's cleared, start on the next one.

Getting approval for a mortgage will be impossible with arrears - and the underwriters will not take your word that you'll use the funds to clear the debts.

Just imagine I lent 1,200 from you and agreed to pay back 100 per month. After 8 months, I've only paid you for the first 2 months and then come asking you for another 1,200 loan - what would you say?
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# 3
marathonic
Old 17-11-2012, 1:51 PM
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Also, I see you have a lot of debt but haven't yet posted a SOA.

Do a SOA and post it on the Debt-Free Wannabe board to see what people think.

The SOA can be done here: http://www.stoozing.com/msoc/soacalc.php
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# 4
Domino9
Old 17-11-2012, 1:56 PM
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Do an SOA as suggested above.

Your mortgage arrears should take precedence over unsecured debts, so pay token amounts to unsecured debts whilst getting up to date with mortgage and any other priority debts that you have.

If you post your SOA here, then people will have a clearer picture of your financial situation, and will be better placed to give pointers.
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# 5
marathonic
Old 17-11-2012, 2:02 PM
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Quote:
Originally Posted by Domino9 View Post
Do an SOA as suggested above.

Your mortgage arrears should take precedence over unsecured debts, so pay token amounts to unsecured debts whilst getting up to date with mortgage and any other priority debts that you have.

If you post your SOA here, then people will have a clearer picture of your financial situation, and will be better placed to give pointers.
Maybe I'm wrong here but, provided you have an agreement with the bank that you can pay a certain monthly amount to clear the mortgage arrears, would you not be better focusing most of the spare cash to the debt with the higher rate?

Of course, in the absence of such an agreement, you are 100% correct.
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# 6
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Old 17-11-2012, 2:07 PM
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thank you

we do have an arrangement with the mortgage lender which i have been keeping to since 2009.
we dont have the full 1200 per month to spend on debts as we are using some of it to pay the unsecured debts..
if it isnt possible to get another mortgage then we will just have to carry onas we are just seems it will take quite a few years..

with regards to not getting another mortgage because of arrears is it normal that my mortgage account isnt on my credit file?
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# 7
Must.stop.spending
Old 17-11-2012, 2:08 PM
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i also have otherexpenses out of the 1200.. tax, boiler cover, insurance, agency fees
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# 8
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Old 17-11-2012, 2:13 PM
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its prob not easy to understand without full info..
i havealso recently taken in a relative so we do need to move 5 of us in a small 2bed is meaning myself my husband and our 2 kids are in one bedroom my daughter hasnt even room for a bed.. so we will be using the rent from the house to pay for rent elsewhere as of next month.

i will do a soa now
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# 9
marathonic
Old 17-11-2012, 2:26 PM
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Yeah, definitely do a SOA.

If you use the rent to pay debts, you'd effectively be on the same boat as someone with NO debts and only their salary to live on. If you can't do that, there must be something amiss.
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# 10
joerugby
Old 17-11-2012, 7:06 PM
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Sell both properties. Pay off all your debts. Buy something you can afford
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# 11
Dave Ham
Old 17-11-2012, 7:29 PM
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You will always get a mortgage with that much equity, guaranteed.

What you need to do is get your Experian, Equifax and Call Credit files and get them to a decent broker..

The better the broker, the better the rate and terms you are likely to get.

Get the practical help on the other sub-boards, although if you want the finance it will be there..

Good luck
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This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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# 12
Must.stop.spending
Old 18-11-2012, 11:58 AM
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thank you for allthe replies

unfortunatly selling the properties in my mind is not a great idea.. the flatwill break even if not be in negative equity time i have paid solictor and agents etc so seems pointless selling when renting it would cover mortgage and more?

affordability isnt really the issue.. problem we have is that without combining our incomes we can not get a big enough mortgage to buy a big enough property. we cant get a joint mortgage due to my credit file..

so in my mind if i can get straight sort my credit file out then in 2 years or so we could get a mortgage together?
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# 13
Thrugelmir
Old 18-11-2012, 6:49 PM
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Quote:
Originally Posted by Must.stop.spending View Post
affordability isnt really the issue..
Lenders will take a different attitude. As the management of your personal financial affairs suggest otherwise.

You'd be better selling the inherited property and sorting out the issues you have. To give yourself a clean start. With no mortgage to pay and no debts to service. Should be possible for you to save quickly.
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