Some advice please!!

mwaheed

Hello,

I needed some advice please on if this idea of mine is possible? :question:

My father owns a freehold property and is going to retire in May. So he now wants to deal with inheritence issues such as writing my share of the property in the deeds.
The property value is approximately £530k or there abouts.
I currently have a debt of approximately £25k. So what I wanted to know is that could I mortgage or re-mortgage and use the money to clear my debt. I was also considering rennovating the property and maybe extending it.
Would I be refused the mortgage because of my credit history? would I have to wait a few months with the property share on my name?
What are my best options?
Anyone?

Thank you,

Waheed :think:

Cannon_Fodder

If you only get a share of, rather than the whole property, you cannot get an individual mortgage. Which then runs into complications of the age/income/credit history of other names on the deeds.

Does your father/other live in the property? - a Lender will not want to lend on a property with an incumbent family member, who will presumably want their own residency protected.

And yes, your own credit history could stop it, on its own.

Also, generally speaking, actions to protecting an inheritance, still require you to wait for it to become an inheritance - you'd open up CGT/gift issues.

Its a bad idea to secure unsecured debts, anyway. Get to the debt-free forum, cut your expenditure and clear the debt normally.

mwaheed

Hi thanks for that,

So why cant I get a mortgage on my share of the property if my parents also have a share in the property.

Also I dont understand what this means.. "a Lender will not want to lend on a property with an incumbent family member, who will presumably want their own residency protected."

sorry..

TrickyDicky

mwaheed wrote: »

Hi thanks for that,

So why cant I get a mortgage on my share of the property if my parents also have a share in the property.

Also I dont understand what this means.. "a Lender will not want to lend on a property with an incumbent family member, who will presumably want their own residency protected."

sorry..

Basically, if you defaulted on the loan, the bank would reposses and want to sell the property to get their money back. With other part owners, this makes it very hard which the banks wont like, neither will the other part owners, especially if someone is living there that isnt you.

Cannon_Fodder

As Tricky says, its not possible to repossess 25% (or whatever) of a house. Lenders want to have the ability to get hold of the whole thing and sell it to get their money back.

On the "incumbent family member" thing - i.e. if your Father (or another family member) wishes (or is permitted by your Father) to live in it, until their death, their solicitor would want to make sure any mortgage upon the property protected their ability to do so. Called a "life interest", if I remember correctly.

Lenders don't like that as, again, they cannot/struggle to repossess where someone has a legal right to reside there.

mwaheed

oh right i see, yeah that makes sense now.
So what if it were a joint mortgage with my fathers name included would that make a difference?

Cannon_Fodder

Joint issues include;

- If your Father has other properties with mortgages, his income might not be enough to secure this additional mortgage.

- Or be enough to offset the damage your debts have done to your credit history - plenty of people wanting joint, opt for single due to one person's credit.

- Or his age could mean the mortgage runs well into retirement, which limits Lender choice, and potentially would be a decline.

- Another question would be whether your Father would WANT to tie his own credit history to yours - once tied, it is difficult to untie - plenty of joint arrangements have gone pear shaped and left the 'innocent' half of the couple with damaged credit - it would be silly to risk a £500k+ house for a £25k debt, imo.


As you had £38k debt last May, to now be at £25k and have a better income, "making things more stable", you shouldn't need to secure the debt to a house.

Depending how your attempts to avoid the CCA last year turned out, you might be completely wasting your time - have you checked your credit history, lately?

What money will you use to renovate and extend the property? Use that money to clear the debt, stop paying interest on it, and you'll have a better credit position with which to get your own first mortgage on a place of your own, and keep the inheritance for a nest egg.

mwaheed

Thank you,
Yes I am making progress in comparison. I just thought that paying a mortgage would actually be cheaper than the interest and payments to the remaining cards.
What about a secured loan on the property? Is that worth pursuing?
I dont want to do anything that would take a negative effect on my credit history as I am working towards improving that.