Part Share in a mortgaged property

HeadAbove_2

betmunch wrote: »

I really dont think you should be considering joint mortgagors at all. If one party stops contributing to the mortgage the other party will have to pick up the slack, which will be outside of any agreement. - agreed

In my humble opinon the only way forward for this would be for the new invester to take a second charge and accept that in the early years he has very little, if any protection for his investment. - is this actually allowed? I would have thought that if (for example) I had a mortgage on a property then someone else unrelated couldn't take a second charge on the same property?

Theres no reason why the second charge has to fit within the equity though, so that doesnt have to limit it.

Keeping the mortgage in your friends name, and the investor having second charge keeps things simple. Your friend would simply own a property with more money secured on it than it is worth.

I would put this to your friend as the only way to do it safely for him, which it is. and then tell him you are 99% sure he wont find anyone to invest, but allow him to find that out for himself if he wants to. - I have actually told him I'm 100% sure that he won't find anyone to invest yet I'm still working on the figures for him, it's not my call at the end of the day

Would any lender, primary or otherwise, allow a second charge to be taken on a property where the loan exceeds the value? I know it can get to that state through falling markets but I wouldn't have thought they'd knowingly allow this to take place?

betmunch

HeadAbove wrote: »

Would any lender, primary or otherwise, allow a second charge to be taken on a property where the loan exceeds the value? I know it can get to that state through falling markets but I wouldn't have thought they'd knowingly allow this to take place?

Its down to the holder of the first charge to decide. If there are no repayments to the investor (are there?) then wheres the risk to the holder of the first charge?

pre-credit crunch you could get secured loans to 125% of property value, so it much have been agreeable in the past. Obviously everyone has tightened up since then though

HeadAbove_2

betmunch wrote: »

Its down to the holder of the first charge to decide. If there are no repayments to the investor (are there?) then wheres the risk to the holder of the first charge?

pre-credit crunch you could get secured loans to 125% of property value, so it much have been agreeable in the past. Obviously everyone has tightened up since then though

The only repayments to the investor would be their share of the rental income on a monthly basis.

I see what you mean on the pre-credit crunch issue; I think the liklihood of getting anywhere near 125% LTV is pretty slim in the current climate .

Basically, the whole thing is a no-goer, as I expected.

I really appreciate the guidance I've had on here as it's helped me to see exactly why it's a no-goer, so thank you for that.