Help pls! Remortgage with 85%+ LTV with a second party who already owns a property

srdenny

Evening each,

First time posting so be nice!

I've currently got a property with a partner, now ex-partner who wants out of the mortgage, which is with Britannia.
I don't want to go to market because I don't know how long it would take to sell (which would mean my ex-partner is still financially responsible) and the equity would be much less than I put in.

So, to allow my ex to come off the mortgage, but me to keep the property I would need another person on the mortgage (as Brit won't lend me the full amount on my own). The solution I've looked at is for my Dad to become a joint owner with me as a temporary measure to allow the market to get better.

The value of the property is £190k (recently valued) and we owe approx £168k, which roughly equates to 88% LTV. Britannia won't lend more than 75% LTV as my Dad already owns a property (his), but this is outright, i.e. there is no mortgage owed. Is this true? Any way round this?

For ref. payments are £940/mth, 35yr term with 33yrs, 3mths remaining. Early Redemption before 28th Nov 2009 - £3300, after 28th Nov - £1800.

The question: Is there a lender who would give us a LTV on a joint mortgage (even if one party owns another property) of equal to or more than 85% LTV? Or are there any other scernarios that could work?

I find myself really stuck in this situation so any help would be gratifully received.
Scott

srdenny

Please, anyone? I could really do wtih some advice very soon, else I will be forced to put the house on the market and that could lose me '000s.

TIA.
Scott

Mrs_Bumble

Are you sure that Brittannia have turned it down because of the second property and not the term of the mortgage?

What did they say?

If Britannia won't do this for you, I don't understand why you would be willing to pay the redemption penalties and legal fees for adding another party just to remove your ex partner. Can you not seek legal advice and see if you can get a legal document drawn up so that she doesn't have any claim on future equity as she is not contributing?

If you do put your dad on the mortgage make sure there the title is registered as tenants in common and there is a will in place as the property would become part of his estate.

srdenny

Morning, thanks for your reply.

I know that there would be ERC and Sol. fees to pay to put my Dad on the mortgage but I can't afford the full amount on my own in Brit's eyes: they will give me £121125 and I need £168k, so I will have to have someone on it with me.

What Brit said yesterday was that they would lend us 95% LTV if it was just a case of my Dad and me on the mortgage. Then they asked if my Dad owned any other properties and he said yes, but he doesn't owe anything on it. In fact he paid off his own Britannia mortgage about 4yrs ago. So then they said because there is more risk, i.e. he won't live in the other property (i.e. mine) then the LTV reduces down to only 75%....? Can this be true? Any way round it?

The property has been valued at 190k, so the LTV is roughly 88%. We can reduce that to 85% by paying a small lump sum, but we can't afford to pay such a sum to reduce it to 75% LTV, hence why a remortgage with either 85% or more LTV is needed...

Are you saying then, that it would be better to keep my ex on the mortgage, but my Dad pays her share for her? Is this legal? If we paid her off now, would we be able to get a legal contract to say in return for her pay off figure she is no longer entitled to any further equity?

Many Thanks.

chrisaston

I have had a similar problem with Britannia, and also HSBC who insist on 80% compared to Britannia's 75%.

Try RBS as they would were been ok with me when I wanted to keep my flat and but a new place, they just take the second property into account on affordability terms, not just LTVs.

Mrs_Bumble

So what you are actually saying is that you can't afford the monthly mortgage committments without your partner being there?

If this is the case can't you just take a lodger in? Why would your Dad want to contribute to your property on a monthly basis?

Does your partner expect an equity payment out of the property now?

srdenny

I would give my ex an equity payment now yes. What has been worked out is half of what the equity would be if we sold now, i.e. the anticipated selling price of £185k minus what would be owed on mortgage plus any fees and legal costs.

I'm not too keen on having a lodger, as the rental income is not guaranteed. My Dad is willing to give me a sum of money that could form a deposit for a future property. However, a lump sum in one go is not really that viable. Whereas paying half of my mortgage will mean that in (say) 2-3 years, when there are no ERC fees, when property may have gone up a small amount, the capital owed will also have gone down so any equity in the property will become mine and my Dad has 'only' had to pay half of mortgage at anyone time, rather than a lump sum in one go. He has no mortgage of his own to pay.

I will have a look at RBS thanks. Their website says they do remortgages at 85% LTV at 5.79% on a 3yr fixed I think. Do you now if owning another property would jeopardise this?

Thx

Mrs_Bumble

I don't see the logic in paying fees etc to remortgage, increase your balance, for a property that you are effectively saying you can't actually afford?

It is ok relying on your dad to help with the monthly mortgage payments?

Is that sustainable for a considerable length of time? At the moment your mortgage payments are £940 so are you saying that he is happy to pay what £500 a month (as you are increasing the balance) for 3 years making £18,000, what if you can't sell at that point, is he happy to continue?

How old is your dad? Maximum age at end of term of the mortgage with RBS is 70, any retirement income would have to be sufficient to carry the mortgage as well and so the current 35 year term might not be possible?

Is it not better to sell now and have clean slate, with no further costs incurred and walk away and then purchase something of your own?

srdenny

I don't want to increase the amount, just to have the amount that I have currently outstanding - £168k.

If the house is put up now, there is no guarantee of when it will sell, and all the time the house is on the market, the current mortgage will still have to be paid by myself and my ex, who is currently living with parents and who wants to move out of that situation by renting a flat asap. Being on the market could take 12mths or more. Plus if we sold now, the amount of equity that I could get out of the house and put towards another property would be tiny - £5k or so. Therefore, I would have to move back to my parents to save more money, which I'm not keen on doing anyway. Hence, the reason for wanting to keep the house at the moment (albeit without my ex on the mortgage). I have equity tied up in the house, and the only way to get at that is to still pay off the capital and to wait for a bit for the market to go back up.

My Dad is able to pay this relatively small sum per month for the forseeable, so this is not an issue. He is 60yo. Brit do mortgages up to 85, so we could have a 25yr mortgage with them, if it were not for the 75% LTV issue.

Mrs_Bumble

So are you settling the equity that you are going to give your ex partner out of savings?

As far as a new lender is concerned your father would have to be able to pay the whole mortgage amount for the term of the mortgage, as you both would be jointly and severally liable for the debt.

When does your father intend to retire? Will he have an income after this point, any lender is likely to base affordability on this income.

With a much shorter mortgage term it will increase the mortgage payments considerably.

You sure you wouldn't rather have a lodger? Financially I think you are going to put yourself in a precarious position from what you have described here but it isn't easy to get the full picture from these posts, perhaps it would be worth speaking to a local independent mortgage broker.