own property outright - want to borrow against it

globalloon

I own a property worth around £230K

To buy it my elderly mother gave me her life savings of £30K and took a bank loan of £25K. Other than my personal debt to her (the re-payment of which is based on trust) I owe nothing on the house.

I have owned and lived in the property for about 6 months now and I want to get a mortgage of around £40K against the house so I can pay off the £25K loan and give her a lump sum (i'm paying back her savings on a monthly basis but would be happier if she has a lump sum for a rainy day)

Is it possible to borrow against my property for this purpose and if so what kind of mortgage is this? What kind of terms could I expect from a lender? Would it be preferable to get a mortgage against my salary or my property?

I work full time with a permanent contract and earn £25K a year

HappyMJ

globalloon wrote: »

I own a property worth around £230K

To buy it my elderly mother gave me her life savings of £30K and took a bank loan of £25K. Other than my personal debt to her I owe nothing on the house.

I want to get a mortgage of around £40K against the house so I can pay off the £25K loan and give her a lump sum (i'm paying back her savings on a monthly basis but would be happier if she has a lump sum for a rainy day)

Is it possible to borrow against my property for this purpose and if so what kind of mortgage is this? What kind of terms could I expect from a lender? Would it be preferable to get a mortgage against my salary or my property?

I work full time with a permanent contract and earn £25K a year

Yes it is possible. It's just a normal mortgage. If you live in it an owner occupier mortage. You would get it against your income.

globalloon

HappyMJ wrote: »

Yes it is possible. It's just a normal mortgage. If you live in it an owner occupier mortage. You would get it against your income.

thank you for your speedy reply

should i tell my lender that i want to mortgage my house to give money to my mother and for no other reason? will they lend on this basis?

will i get the best rates in this case?

HappyMJ

globalloon wrote: »

thank you for your speedy reply

should i tell my lender that i want to mortgage my house to give money to my mother and for no other reason? will they lend on this basis?

will i get the best rates in this case?

To repay your mother and the outstanding loan. Yes. I don't see why not. You should get some decent rates having a good level of equity and not borrowing a large multiple of your income.

sharpy2010

In all likelyhood, they won't be particularly concerned regarding the reason why you want the cash. There is huge equity involved, as far as repayment of the amount you want to remortgage.

They should be quite happy to do this, I can't really foresee any problems at all :-)

kingstreet

This is a remortgage of an unencumbered property.

You won't qualify for the free valuation and free legals packages most lenders offer with their remortgage products.

This is Halifax criteria on the issue;-

Loans on mortgage free properties must be keyed as 'Home Movers' and the customer is only eligible for the Home Mover range of products and not remortgage products or incentives. Free legals are not available for these applications. Refer to the appropriate product range

A valuation fee will be payable on these applications.

Note: The property must have been registered in the applicant’s name (or at least one of the applicants' names) for a minimum of six months.

globalloon

thanks for the tips