Buy to Let Partner going Bankrupt- Advise, Help needed

franklee

Also when you say joint do you mean joint or tenants in common? Both can be 50/50 but they mean different things.

peachyprice

GDB2222 wrote: »

I have spent a few minutes reading the mortgage terms and conditions of a well-known lender, which is rather an interesting read. It's amazing what they have buried in the small print. Strictly, all 3 mortgages are now repayable in full, immediately. Of course, that may not apply in your case, as it depends on what your lender requires. However, it would be worth reading the T&Cs.

This is pretty much a standard clause in a lot of mortgages, but is very very rarely exercised. Lenders are keen to hold on to their secured status for the long term gain.

spleigh

franklee wrote: »

OP can you afford the loans and costs of running the properties on your own?

I have never had any issues in letting any of the properties. I cannot afford to pay for all mortgages if empty at the moment. But in a year or so I should be able to. I'm currently paying back 6K debt from a failed business. I should be clear of this by end of year. This is where the money has gone.

DesG wrote: »

Just to check, who is going to pay the mortgages now? Is your business partner and his ex-wife paying rent now? Do they have AST's?

The business partner and his wife are paying the interest only mortgages as rent. This is not good because we're losing rental income as the mortgage payments are low at the moment.

Sorry what do you mean by ASTs?

franklee wrote: »

Also when you say joint do you mean joint or tenants in common? Both can be 50/50 but they mean different things.?

The mortages are Joint.

For me personally these properties had to be a long term investments (15 yrs +). If business partner goes bankrupt am I liable for the full mortgage amount because I have an income? If so would it be better to walk away and let the properties get repossessed. How would that affect my credit?

silvercar

For me personally these properties had to be a long term investments (15 yrs +). If business partner goes bankrupt am I liable for the full mortgage amount because I have an income? If so would it be better to walk away and let the properties get repossessed. How would that affect my credit?

You are both jointly liable for the whole debt.

If you want to continue this as a letting business you need to get tenants paying rent, rather than failed business partners paying low mortgages.

Walking away and letting the properties get repossessed would damage your credit rating, though having a financial link with a near bankrupt will possibly have already damaged it. Check your credit reports from experian and the like.

Clearly mistakes have been made. Increasing the mortgages on the let properties to clear other debts has left you exposed and will certainly limit your ability to remortgage. Currently max BTL mortgages are LTV of 65-70%. Do the lenders know that the owners and family are living in properties on mortgages designed for letting?

GDB2222

AST = Assured Shorthold Tenancy

spleigh

silvercar wrote: »

You are both jointly liable for the whole debt.

If you want to continue this as a letting business you need to get tenants paying rent, rather than failed business partners paying low mortgages.

I agree but as he owns half this may be diffcult to implement. Also what if they move out and I cannot findtenants. This is the risk.

silvercar wrote: »

Walking away and letting the properties get repossessed would damage your credit rating, though having a financial link with a near bankrupt will possibly have already damaged it. Check your credit reports from experian and the like.

I do not want to walk away because I feel that as a long term investment it could be turned around. The dilemma is should I take over now, walk away or wait for bankruptcy.

Last time I checked with experian my credit rating was excellent. I've never missed a payment.

silvercar wrote: »

Clearly mistakes have been made. Increasing the mortgages on the let properties to clear other debts has left you exposed and will certainly limit your ability to remortgage. Currently max BTL mortgages are LTV of 65-70%. ?

I didn't remortgage to clear debt. The money was used for a business that recently came crashing down due to the death of a key business partner and recession. You are right though. Big mistakes have been made. But its how I handle them which will be the true test for me.

silvercar wrote: »

Do the lenders know that the owners and family are living in properties on mortgages designed for letting

No. What would happen if they find out?

GDB2222

Quote:
Do the lenders know that the owners and family are living in properties on mortgages designed for letting
No. What would happen if they find out?

They'd reduce the interest rate from BTL to owner-occupied?

Seriously, there's not much you can do if they are going bankrupt. You really want them out of the properties so they can be let at full market rental, but how do you get them out? I think you've been taken advantage of.