Is it possible to have a separate mortgage on a house to extend?

Kryza

My partner has a mortgage on her house with no equity, i want to buy 20% of the house by possibly getting my own mortgage on the house, but we want to use the money to 1 extend and get any expensive maintenance done to the property and 2 to pay off a loan of mine is this possible?

holly_hobby

You are unable to apply for a mortgage in respect of 20% of the property value - as there can only be one 1st charge mortgage on a property - any subsequent loan with a different provider will take order of precedence after this i.e 2nd charge, 3rd etc. An as ALL mge lenders require 1st charge this option is out I am afraid.

Further to which, the only way to effectively "buy" 20% equity in a property, would be to effect a joint mge with your partner, and hold the beneficial ownership in unequal shares under a tenants in common arrangement. (you adding to the mge and deeds being classed as a Transfer Of Equity)

The way to finance the extension etc (either just on your partners name or a joint application in respect of a transfer of equity) would be by a further advance, secured loan (if funds reqd in excess of 25k), or by a re-mortgage - which all involve the requirement of free equity (and transfer of equity if so reqd). If the reqd funds are less than 25k a personal loan may be a route - that I don't recommend but is an option all the same.

So unfortunately at this moment in time, it appears that you are unable to proceed with your plans (of course notwithstanding the fact that there will be no equity released, you may still apply to be added to the current mge (and liaibility) if you wish, subject to status).

So as far as I can see its back to the drawing board I'm afraid - wait until the property gains in value or shelve your plans for the forseeable.

Hope this helps

Holly

maninthestreet

The mortgage lender will require the first charge on the property, which they won't be able to acquire to your parnter's existing mortgage.

Kryza

I've read about a 2nd charge from the same lender would that make any difference if i was to go to the same lender?

holly_hobby

Yes technically under the sucession of charges the lender themselves may apply a 2nd charge - but there is no equity to base any FA or charges on !

As said earlier, this proposal isn't viable as we talk today.

H

Kryza

What could we do to make it viable? There must be a way.

DannyboyMidlands

You want to borrow 120% of the property value. Never gonna happen.

Why not get a loan from elsewhere?

Kryza

Ok if you were in my shoes and wanted to do this, how would you go about it?

DannyboyMidlands

Go about which part of the plan? The repairs? You owning a share of the house? Pay off your loan?

Since there is no equity in the place your options are limited.

Kryza

It's more to extend the property which would add value and to pay off the loan

DannyboyMidlands

How much is the house worth? How much after extension? How much is the existing loan?

In theory you could borrow some money, do the work and then remortgage but I doubt that the extension would add enough value to pay off the loans and leave enough equity for a decent LTV of 80% or so.