on behalf of ex wife

socrates

Morning!

Ok here goes - my ex wife who I still get on well with has some mortgage queries. She currently has a buy to let mortgage with HSBC 1.75% over base with 23k o/s no penalty for early redemption. A house worth about £400 - £450k - mortgage free and another property a small shop (tertiary location and poor condition) with a one bedroom flat above (rented long term). Also about £10k in o/s credit card bills which have been moved around from card to card no more options left there. Unfortunately the shop has been empty for 7 months. She works from home and her earnings are about £20k pa.

She now needs money plus she wants to get a newer car - my advice was to convert the shop into residential - other shops been converted so no problems to get permission obviously this would cost.

My advice is to get an offset mortgage based on the main residence say about £200k or whatever she can get clear all her debts including the other HSBC mortgage and use about £30 -£50k to convert the shop (could be more depends on builders)

She has finally understood that she only pays on what she actually uses - after much patient explanation.

Open to any comments/suggestions - any other ways around this I have not thought of or if this is the route who should she go to in terms of lender?

Many thanks in anticipation!

wymondham

I don't have any advice but just wanted to say what an excellent 'ex' you are, offering advice etc...!!

socrates

Thanks. Well we have two sons - so I cannot just walk away from things - not that I want to anyway and things are easier as she does not have a new partner to contradict everything I say. Also I believe in giving children the best of both worlds rather than the worst of one.

Very much off topic!

Toughluck

If she is looking to re-mortgage the BTL property it will all depend on rental income. She earns £20K so she'll pass the minimum income needed for a person to take on a BTL mortgage.

Some lenders (Chelsea, TMW) will not take into account the rental income under 75% LTV. Put it this way, if she gets more than £677 per month she be OK.

Personally, and I do NOT know the full details (and I hope there is no adverse credit), I think is a WIN WIN WIN situation for your ex. If she wants to raise £100K on the BTL I cannot see that being a problem.

socrates

No she is looking to remortgage from the main residence as this will be a cheaper rate than a BTL - I also forgot to say that the shop/flat property is mortgage free as well. My idea was that the shop once converted into a flat would generate enough to pay the mortgage on the £80k or so she uses. Plus would overpay as well to eventually reduce the amount owed.

Toughluck

i'm confused sorry. If it is a residential, where does the VTL mortgage come from. Is this on another property?

If it is residential on £20K pa earned income she will be lucky to get £120K let alone the £200K you think. all brokers know that someone somewhere will get her the £200K if she really needed it by committing mortgage fraud. For my pices of mind, top £120K max lending.

Do you also mean an offset mortgage or a mortgage with a drawdown facility when referring to "she only pays on what she actually uses"?

TighterThanTwoCoatsOfPain

It could be an offset mortgage if FirstDirect are typical Offset mortgages?

I applied for more than i knew i wanted and have the facilty to balance transfer anything up to my limit into my current account.

Works like a big overdraft that has a huge limit and only pay for the amount i am in debit. No idea if thats not normal..