Interest in house

cootambear

Currently `someone I know` is facing bankruptcy and has a mortgage of £95k on a house worth £120k. Would it be in his interests to get a second mortgage up to its value to prevent it being sold as an asset?

Doucam

In a word no. If he takes out a debt like that and then goes BR he will get in a lot of trouble, as it will be deemed that not only has he taken a debt knowing he could not pay it back, but that also he has taken the debt to try and keep his house and stop the OR getting it.

Brock_and_Roll

errrr and in the current climate he has no chance of getting a 2nd mortgage anyway!

Doucam

Brock_and_Roll wrote: »

errrr and in the current climate he has no chance of getting a 2nd mortgage anyway!

Well yes there is that as well, I would guess that if they are thinking of BR then they have a lot of debt, so unlikely any lenders would be willing to lend anyway.

I didn't think of that, was just :eek: that someone would really think of doing something like that!!

Of course, they could get a 2nd mortgage and pay off some (or all) of their debts to save them going BR?

cootambear

Surely someone must have done this, what happened to them?

tigerfeet2006

The OR will be mightly pee'd off if any one did that. They would look into your affairs more closely and probably slap a BRO/U on you.

If there is equity in the house then you will get a chance to buy that back from the OR. Are you sure there is equity? Has the house been valued for a quick sale recently?

cootambear

TUVM for the replies so far.I have another question please;

Lets say the mortgage is 90k and the valuation is 100k

Would the receiver try and sell, bearing in mind they may raise less than 90k for a quick sale?
What have peoples experiences been when there is only a marginal amount of equity?

tigerfeet2006

You would be asking the estate agents for a quick sale valuation, so the valuation should be the 90k.

bonkers_for_bargains

The OR will ask for at least 2 independent valuations and would usually also instruct a third party to do another. They then take the average valuation of the 3.

If the property is jointly owned, then any equity is split between the owners.

If the property is remortgaged to the hilt prior to going bankrupt, then a BRO or BRU can be put in place which lasts for a maximum of 15 years.

Or there's always prison if they've been incredibly naughty :eek: