Girlfriends parents losing house. Need Help!

Annawatson_2

Introduction of a legally binding agreement, which has sold the house within the next 12 months, and give them all the revenue less your mortgage payments and other costs such as repairs or legal fees if you do not want to leave and you have to evict them. They end up walking out of a lot more money than if the property was seized, but you still have a level of comfort you would have much capital property at all the issues that appear.

ian_jamieson

Well I've been busy doing loads of research.

I do some contract work for a finance company and had a chat with the mortgage adviser there.

I'll tell you what I've found out. I phoned her dad and ran a credit check etc.

Mortgage is 97k
They have a 10k loan secured on the property.

Forgot the mortgage lenders (left the note in work). But both lenders are going into administration. The 10k secured loan in through london scottish.

As he's self employed and doesn't have great credit due to the financial difficulties over the last few years he's paying stupid amounts.

There's work going on in the house that isn't finished after he broke his back. He does work, but is finding it hard to get the finances to buy the materials to get it finished. This means the house isn't complete and interested buyers can't get a mortgage on it.

1) One option I have is a bridging loan http://www.ritefinancial.co.uk/loans/bridging-loans/

Basically, they'll pay the mortgage and bills over 3 months and once he gets the work finished, he puts it up for sale and clears the balance. It would add around 10k to his debt, but if he can sell it after the work it complete it wouldn't be a problem.

That seems to be the selling issue right now, as people can't get mortgages without the building being completed.

To be fair, it's just a little work in the granny flat - doesn't look like much to me.

His problem is, even if he did get bridging finance, he can't afford the materials or the labour to finish the job.

2) Option 2 would be to get a cash buyer at a reduced rate. The house was valued at £280,000 before the recession and is currently reduced at £220,000.

I've been looking at getting it sold lower than that, to hopefully cover the finishing costs etc of the cash buyer. Most of these type of people will usually give you 75% of the current value. You can see the house here * LINK REMOVED * - That whole thing in the picture is his.

Hopefully this might help people in similar situations, but if anyone has any other ideas, please chip in.

hcb42

Is the £5K to finish the work? In which case that makes sense.

Used to live near there, Perceton. Lovely house externally too.

ian_jamieson

The 5k is their mortgage arrears.

Yeah, it's a beautiful house. Decor isn't to my liking. But rip up the carpet, stick in some dark wooden flooring to match the beams and go for a open-space look, it would look good. Views over the balcony are amazing too.

ian_jamieson

hcb42 wrote: »

Is the £5K to finish the work? In which case that makes sense.

Used to live near there, Perceton. Lovely house externally too.

Never actually been to Perceton. Have lots of friends in Irvine though. Lots of people from Irvine go to Stewarton Academy. One of the best schools in Ayrshire.

princeofpounds

OK, that's a better picture, thanks for that.

It sounds to me that if you have enough resources and are willing to take the credit risk and property risk that the situation is possible to restructure.

They are clearly on a very high risk rate, and rightly so because of the risk factors they represent. However, if the bank (or more likely any bank approached for refinancing) were to be offered a better credit risk to face off to then you would be able to access much lower rates, which would reduce the burden of repayment considerably.

I cannot give you any advice on whether to actually do anything like this. Only you really know the situation.

I would suggest however that it is only worth proceeding if you can restructure the financing. Merely lending the arrears will not fix the situation as they are clearly unable to keep up with the current rate of repayments. That means you need to have the financial resources to at least assume the debt. Given you cannot raise a mortgage on the property that is difficult and will mean expensive financing for you instead!

You didn't discuss what stage they are in the repo?

ian_jamieson

princeofpounds wrote: »

OK, that's a better picture, thanks for that.

It sounds to me that if you have enough resources and are willing to take the credit risk and property risk that the situation is possible to restructure.

They are clearly on a very high risk rate, and rightly so because of the risk factors they represent. However, if the bank (or more likely any bank approached for refinancing) were to be offered a better credit risk to face off to then you would be able to access much lower rates, which would reduce the burden of repayment considerably.

I cannot give you any advice on whether to actually do anything like this. Only you really know the situation.

I would suggest however that it is only worth proceeding if you can restructure the financing. Merely lending the arrears will not fix the situation as they are clearly unable to keep up with the current rate of repayments. That means you need to have the financial resources to at least assume the debt. Given you cannot raise a mortgage on the property that is difficult and will mean expensive financing for you instead!

You didn't discuss what stage they are in the repo?

I don't think I'm going to take on the debt. Maybe if I was guaranteed the rent, but under their circumstances I wouldn't bet on it.

They're at the stage where they have two weeks to get out. I can halt it if they can go with a bridging loan, but don't think they can go ahead.

I'll have to see if I can find a buyer for much less than the current value. Maybe £180,000 - £190,000. Should give the buyer some finance to finish the granny flat. It doesn't look like much.

JQ.

Yesterday

JQ. wrote: »

I totally agree with the cautionary comments on this thread.

If you really are desperate to help them, why not buy it off them for £100,000 and pay off their mortgage. Put in place a legally binding agreement that the house needs to be sold within the next 12 months and that you will give them all the net proceeds from the sale, after deducting your mortgage payments and any other costs, such as repairs or legal fees if they chose not to leave and you have to evict them. They would end up walking away with alot more money than if the property were repossessed, but you still have a level of comfort as you'd have considerable equity in the property to deal with any issues that appear.

Today

Annawatson wrote: »

Introduction of a legally binding agreement, which has sold the house within the next 12 months, and give them all the revenue less your mortgage payments and other costs such as repairs or legal fees if you do not want to leave and you have to evict them. They end up walking out of a lot more money than if the property was seized, but you still have a level of comfort you would have much capital property at all the issues that appear.

What an odd post - did you cut and paste what I posted and just change a couple of words?

JQ.

Personally, if i was going for a bridging loan I would only want it to be very very short term until I could properly remortgage. Is there no way of either getting a proper mortgage now in the time you have, or delaying the bank while you get a proper mortgage? Presumably, even if the bank do repossess, it will still be at least 6 to 8 weeks before they get their money from auctioning the property, so it would still make sense for them to allow you time to secure a mortgage.

hazyjo

Also would only consider a bridging loan for a couple of weeks or something. And only in an emergency!

Can't they sell it at auction themselves? Probably not if there's debt secured against it.

Jx