Realising equity from 2nd home

mikeg1

I have posted elsewhere in various forums about debts we have. And most feedback has been really helpfull and comforting. We have large debts mostly from credit cards.
I have spoken to CCCS and am considering a DMP, but also want to consider other options.

One of these is that my wife is 50% ownder of a second property. Property is worht £150k and has no mortgage.
The other half of the proprty is owned by her 70 year mother.

Can anyone give advise of how we might be able to borrow against this, her mother has no income as such except for the proceeds of rent she gets from this property.

I know lending is tight to say the least, as we have tried and failed to re-mortage on our own house - even though we have £80k equity.

Any help would be greatly appreciated.

Please let me know if futher information is required.

luckyfool

is the other property a buy to let? It can be refinanced onto a buy to let mortgage, though your mother in law would also need to be named on the mortgage. As the mortgage would be for the disproportionate benefit of her daughter (and you) rather than her the lender might require her to have independent legal advice to ensure she was aware of the implications. She would be jointly liable for the debt, and the solicitor doing the remortgage could draw something up to confirm to confirm that once any mortgage was repaid in the future your mother in law would get her share of the proceeds back first. I would assume that you (and your wife) would pay the mortgage so that she would still have her income from the rent?

The amount achievable will depend on the valuation and rental income. Assuming the rental yield is good then a maximum of up to 80% would be obtainable, though better rates at 50-60%, and depending on the lender they may consider an interest only term which could go as long as your mother in law's 90th birthday.

mikeg1

Thanks so much for your reply.
The other property is owned 100%, with no mortgage and it is let on a yearly contract.

Yes you are quite right that we certainly would not want any costs going my mother in laws way - and would agree to what ever to ensure she was not exposed.

We would pay the mortgage in full, not my mother in law.

Yes they recevie £600 per month in rent - which is split between them £300 each.

Your reply is very helpfull, where would you suggest I start the ball rolling in terms of speaking to someone to get things going.

As I might of mentioned in another post we have tried initially to raise funds by remortgaging ourselves - as we do hold at least £70k equity. But have not been able to find a lender that will help.

So this might be an option, but I know banks are not very generous at the moment.

Thanks again.
Mike

GMS

mikeg1 wrote: »

Thanks so much for your reply.
The other property is owned 100%, with no mortgage and it is let on a yearly contract.

Yes you are quite right that we certainly would not want any costs going my mother in laws way - and would agree to what ever to ensure she was not exposed.

We would pay the mortgage in full, not my mother in law.

Yes they recevie £600 per month in rent - which is split between them £300 each.

Your reply is very helpfull, where would you suggest I start the ball rolling in terms of speaking to someone to get things going.

As I might of mentioned in another post we have tried initially to raise funds by remortgaging ourselves - as we do hold at least £70k equity. But have not been able to find a lender that will help.

So this might be an option, but I know banks are not very generous at the moment.

Thanks again.
Mike

Speak to a 'Whole of Market' broker.

Generally a Buy to Let mortgage requires the rent to cover the mortgage payment plus a %. 125% of the mortgage payment is the general rule.

Some Buy to Let mortgages have attractive rates but huge arrangement fees. A broker would know the best way forward for you.

Does your wife have an income? Does she have any adverse credit?

CLAPTON

its rather confusing to have several threads as your problems are all inter related.
the start is a full SOA
what do your credit records say?
why do mortgage people refuse you a remortgage?
if you mortgage the rented property then you put your MIL in serious financial risk if you fail to make the repayments

mikeg1

CLAPTON - you are right I will post a full SOA soon.
My credit records I think look fine, at least when checking via Credit expert. I have not done a full report however, would you suggest I do - and how (thanks). As for My wifes record I have to re-check this, but it should be ok.

The companies we have aproached to re-mortaqe suggest we have too many expenses to enable to meet repayments, I do not think this is the case - as the repayments for a remortgage loan its self will be under a 3rd of what card repayments are.

I do not want to expose my mother in law, but would sign anything to remove her exposure. Thanks again.

GMS
My wife has an income of £690 pm nett and £300 pm rent income.
I will make contact with a broker and see what's on offer.
Thanks again.

GMS

Some Buy to Let lenders insist on a minimum income for which your wife may fall short.

Speak to a broker and give all information. If there is a solution they will find it for you.

luckyfool

Maximum likely borrowing is going to be circa £115,000 based on that rental income. With your wife's low personal income you are likely to need a btl lender with no minimum income and that does not go too deep into personal affordability (i.e. relying pretty much 100% on the rental coverage). It certainly sounds doable though you will probably find that the very cheapest lenders are unlikely to help.

mikeg1

thanks again - really helpful. Off to Independant mortgage adviser I go...

Thrugelmir

Yes they recevie £600 per month in rent - which is split between them £300 each.

On a £150k asset thats a very low gross return.

In relation to interest you are paying.

Consider selling the property while the market is still strong.

mikeg1

She (mother in law) will not sell the property, it is 50% registered in my wifes name as inheritance. She see's it as an investment (maybe no a good one). So only basis on rasing capital is that of further advance against the property which has no mortgage.
Thanks