Extending my Mortgage - HELP

patboyo

We have an interest only mortgage with Birmingham Midshires which runs out in march 2014.

Last year we built an extension to our house and also a large Granny annex for my wife's mum.

the house is now worth around £ 500,000, O/S mortgage of £ 170,000.

I am self employed and because of the financial strife in the Country I am very concerned that I will be unable to get an extension for five years with no proof of income.

We have never missed a payment since starting this mortgage four years ago but B/M don't deal directly anymore.

My Mum in law is 89years and to have to sell up would be very upsetting for her.

I need some Real Advice Urgently Please

Patboyo

Thrugelmir

Does the mortgage term end or just the product term. There's a distinction. Are you currently on a fixed term product of some kind?

How do you intend repaying the capital balance owed?

opinions4u

1. When does the mortgage term end? (not the mortgage product)

2. What is the net profit in your accounts for each of the last three years?

3. How were you ever planning to repay the debt?

4. How much did the extension cost and how did you fund it?

5. Why do you say you are unable to prove income?

patboyo

The Mortgage was for six years. Interest only.

We intend to sell the house to repay the capital.

No accounts.

Paid for the extension from a legacy left to us

Thrugelmir

patboyo wrote: »

The Mortgage was for six years. Interest only.

We intend to sell the house to repay the capital.

Then why did you build an extension. If you knew your mortgage had so few years to go.

Did you obtain your lenders approval build the extension.

Dave_Ham

I saw your other thread regarding a CCJ, who exactly is on this mortgage currently?

Your loan to value will help you achieve a solution, but does anyone have a declared income who is involved?


Dave

patboyo

Hi Dave,
There are No CCJ's against me or my wife.
We are joint owners and my wife is retired on state pension.
I have not informed the Building Society of what building works have been carried out because we funded the entire thing.

Our Main house was three beds, one bathroom.Now four double beds with a huge en-suite to the new master bedroom.

The annex has two double beds,etc. etc.

I build for a living.

This No Proof of Income is going to prove very difficult I think.

Any help will be welcomed.

Cheers,

patboyo

Dave_Ham

Who was this Tomlin order on from your other thread?

You are correct, the income is going to prove to be a huge obstacle.

Do you not declare anything, or just not much?

Jimbo1976

Given that your ability to remortgage is limited at the moment, the easiest thing to do is to let your mortgage run its course.

if you cannot build your earnings and earn enough to support a remortgage before March 2014 then it is likely that BM will simply extend your term and allow you to keep paying on an interest only basis. None of the banks are turfing out people whose interest only mortgages are maturing without a repayment vehicle. Though this may change during the next couple of years.

You do need to give some thought as to what you are going to do in the long term, as presumably you will want to retire at some stage and may struggle to pay your mortgage from your retirement income.

Dave_Ham

Jimbo1976 wrote: »

Given that your ability to remortgage is limited at the moment, the easiest thing to do is to let your mortgage run its course.

if you cannot build your earnings and earn enough to support a remortgage before March 2014 then it is likely that BM will simply extend your term and allow you to keep paying on an interest only basis. None of the banks are turfing out people whose interest only mortgages are maturing without a repayment vehicle. Though this may change during the next couple of years.

You do need to give some thought as to what you are going to do in the long term, as presumably you will want to retire at some stage and may struggle to pay your mortgage from your retirement income.

Come on Jimbo, you are dealing with peoples homes and lives; if you are not 100% certain on something please do not share as a matter of fact.

There is absolutely no way BM will simply extend your term, certainly not as an aside. They may provide 6 months grace to sort a solution (which the OP is doing in advance) but definitely not just running on and on...

holly_hobby

Hi all and OP,

Few issues really ... but (as Dave H says) there is a possible solution we may be able to discuss.

Firstly ... Daves asked all the qs that are needed to ascertain the siutation, but could I ask, how old you and your wife (or whomever are the listed propety owners) are ?

Did you seek and obtain planning consent for you bldg works, has this also been signed off by the Local Authority Planning Dept aka Blds Inspector ?

Have Land Reg been advised of the extension to the dwelling (ie revised deeds drawn up showing the amended dwelling perimiters & additional annex ?

By annex I am assuming this forms part of the main dwelling, and is not a stand alone unit ? (ie not a little bungalow or such at the bottom of the garden ?)

I know I am now stating the obvious, but you were legally bound to advise your lender of the amendments to the building (even if you believe/have been told, it has increased the market value), as this is a material change to their security, which could actually have a negative effect (due to quality of the works, and the niche market seeking properties with granny annexes).

You say you can't prove income, or the declared income you have isn't sufficient to support your interest only borowings for an extended term of 5 yrs - therefore this isn't an option with your lender.

You say that your plan in respect of your interest only borrowings, was in 2014 (ie scheduled redemption) to sell the property.

But that is contradicted by the fact that you say, that you don't want to sell at this juncture as it would greatly upset your 89 year old mother in law. (to which I can only guess that when you effected this mge in 2008, you assumed Mum would "no longer be affected" by your anticipated sale in 2014 i.e mge end). However she is still about, so you now wish to extend the term to 2019, when she will be 94 yrs old ... but she may still be a concern (despite her advanced yrs) .... putting you squarely back to the issues you have today.

Self cert mortgages don't exist anymore (notwithstanding, it would be naughty to scert income you don't receive).

So the only other option I can think of when looking at the figs, is an equity release lifetime mortgage (thats why your ages are important), which in a nutshell have the following basic terms ....

borrowing capacity is not based on income but age, property value and reqd LTV

they have no requirement for monthly repayments (although there is a provider who does permit this - ringfencing the original debt)

nor do they have a max age redemption ceiling

with redemption(repayment) occuring on death or entry into long term care ....

BUT this would only be appropriate if you intended to remain in the property, for well, life ! This is due to what can be pretty hefty early exit penalites of such arrangements, although of course you may choose (and do have the right) to exit such an arrangement earlier than the above events, and duly absorb levied costs.

Would this be a suitable solution (subject of course to meeting the providers criteria re age etc), whilst also considering the issues re Mum's security of accomodation whilst needed (which could be for some yrs yet .. hopefully !)

If your set in stone plan is to redeem the mge in 2019 (regardless of Mum), and do not want to retain the property as your "forever" home (even if Mum has passed at that point), then an equity release mge will not be the most cost effective way to manage the issue.

Some food for thought I hope ..

Hope this helps

Holly