Is a Re-Mortgage with a Charge, possible?

flyinglizards

Hi,

Sorry for the long post, but I thought all the facts and the current situation would give the most accurate picture for any help.

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THE PLUSES

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We have had an offset mortgage, with Intelligent Finance since 2001 originally at £300,000. With the monthly offset amount close to £2500 a month, now down to £1500 due to interest rate reductions we have kept the payments up and have seen our mortgage steadily decrease.

We now have a balance of £249,000 left on the mortgage and have had been very lucky to see the value double over that time to around £500,000.

Okay, finding £1500 each month for mortgage is not exactly a plus :rotfl:

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THE MINUSES

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I had a business (ltd company) a few years ago which went out of business due to some bad debts. The company had an Overdraft with the Bank at £30,000, which I stupidly signed a personal guarantee on. The company closed in 2008 and the Bank took me to Court for the £30,000 outstanding plus interest.

I fought the case myself and got the case 'Set Aside' once due to the Banks unprofessional paperwork, in fact the Judge nearly threw the whole thing out. But they fought again with another judge and got the case put through and obtained a charge for £34,000 against my share of the property.

At that hearing I made my case for income and expediter and the judge ruled that I could pay £150 a month, which I have done now for over a year without fail.

I have had no contact from the bank or statements saying what is finally owed, but in a call to me at the start of the payments they said that their application for 8% interest applied was not even being covered by the £150.

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THE BIG ASK

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We have so much equity tied up in the property which the bank is unaware of, which I want to keep it that way!. I can get a valuation in writing which shows the £250,000 equity, so.

Can anyone here point me in the right direction of a professional broker who with the valuation allow me to re-mortgage to release these funds. I have read on MSE cases where brokers have negotiated similar deals around Charges.

I can contact the bank who holds the charge and make a Full and Final offer, my estimate is that they would take £15K, going by previous conversations.

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Sticking points are that our Credit rating is pretty bad, due to the charge, plus we have Credit Card debts to keep us going, again we would want to settle all these, F&F even better:cool:.

My wish is to release equity which could put us liquid again, our Credit Card charges are £800 in interest alone each month. So by releasing a chunk of equity, we can still ensure mortgage payments as we have always done, but free ourselves from all the personal debt.

Ideally a similar monthly mortgage payment would be ideal, allowing us to concentrate on our new business which is about eight months away from being profitable.

If there is anyone who has had a similar predicament or maybe a 'friendly' broker or professional on the board who can help, you could be our knight in shining armour.

Many thanks in anticipation.

flyinglizard

opinions4u

Why would you want to remortgage away from IF's 2.5% rate?

Bad credit file plus consolidation means it's unlikely you'll succeed in remortgage without the charge.

With the charge, no chance.

Radiantsoul

If you make the bank a full and final settlement offer they are likely to seek a valuation of the property they have a charge against. On the other hand they probably cannot obtain an order for sale and have not yet sought bankruptcy, so might prefer a lump sum over £150 per month.

I cannot see the bank being prepared to postpone its charge where you seek a mortgage elsewhere. It is just not in their interest to do so.

Perhaps selling is an option?

flyinglizards

Thanks for the speedy replies guys

opinions4u wrote: »

Why would you want to remortgage away from IF's 2.5% rate?

Bad credit file plus consolidation means it's unlikely you'll succeed in remortgage without the charge.

With the charge, no chance.

I know the 2.5% is currently good, releasing equity will cost us, but in the long run finding the funds month in month out on all the cards etc is taking it's toll. It seems crazy to keep struggling and pay the mortgage when you cannot get to the funds you have already paid in and been shrewd with on getting the right purchase.

Radiantsoul wrote: »

If you make the bank a full and final settlement offer they are likely to seek a valuation of the property they have a charge against. On the other hand they probably cannot obtain an order for sale and have not yet sought bankruptcy, so might prefer a lump sum over £150 per month.

I cannot see the bank being prepared to postpone its charge where you seek a mortgage elsewhere. It is just not in their interest to do so.

Perhaps selling is an option?

The judge made an order that the house could not be forced for sale, because of the family unit.

The bank said they would settle for £20K before the Court hearing, but we could not get that kind of cash.

We would not be asking them to postpone the charge, but remove with the correct paperwork on a F&F.


Guys, I know it probably sounds like we 'want our cake and eat it!' and i hope this does not come across in this way:(.

But we have really been through the mill on this, we are not ones to shirk our debts. We built up a successful business and funded it with proceeds of our first house sale, but made some stupid mistakes on hiring the wrong staff and like many start up businesses you learn from those mistakes.

The only 'positives' we have are that the house we are living in now has a lot of equity, we do not want to sell up.

We would love to access the equity, even staying with IF and happily agree good terms with all debtors, if possible.

But as we know we are in a catch 22 with the charge.

Thanks to all

flyinglizard

jamesd

Your business is unprofitable. Expect all lenders to refuse to do business with you while you're not making money. Those that would consider lending would typically want three years of accounts.

Ask Intelligent Finance if based on your repayment record demonstrating affordability they are interested in increasing the amount of borrowing outstanding by £15,000 to settle the second charge, so they get the interest instead of the company with the charge. Agree to continue making extra payments to eliminate the extra £15,000 if they want you to. If IF won't do it, you can forget all chance of getting it done. Asking for money to let you default on another secured loan is likely to go down like a lead balloon.

Alternatively, cease making extra payments to IF until you can accumulate enough to get rid of the charge with a settlement. This is probably your most realistic option.

Expect that a settlement with a shortfall of £15,000 will greatly harm your credit rating for many years.

You have a truly lousy case from a lenders viewpoint. Don't expect to have much success except by the saving the overpayments approach.

Dave_Ham

Ok, banks are greedy for cash at the minute with historic debtors like this situation. Your issue is that they have a charge on the property for a fixed amount.

A deal before CCJ, is much easier than after (although accept your challenging situation)

You can approach whoever is now holding this debt and state that you can only borrow £x and would they be willing to do a deal? They can only say no and it does not affect your income and expenditure as raising from house.

Say they do accept a deal, or you choose to raise the finance and pay it off in full at face value you have 3 new challenges.

1. Credit Score - With a CCJ registered in the last year, there are only a few lenders that would tolerate this.

2. Income/Affordability - With a business failing and new one not yet profitable, not sure on what your income/affordability looks like

3. Losing the rate you have to be replaced by another..

Given your equity, there will always be solutions although you will need an experienced broker and probably charge a fee. The mainstream fee free players will not be likely to solve this.

The solutions are likely to be more expensive also. You could take a second charge secured loan to repay the CCJ debt and also the unsecured debt and thus having the majority of your mortgage on the preferential 2.5% rate and the smaller, newer amount on the much higher priced second charge.

A lot going on, so formalised regulated advice would be the next best step.

Good luck

flyinglizards

jamesd wrote: »

Your business is unprofitable. Expect all lenders to refuse to do business with you while you're not making money. Those that would consider lending would typically want three years of accounts.

Ask Intelligent Finance if based on your repayment record demonstrating affordability they are interested in increasing the amount of borrowing outstanding by £15,000 to settle the second charge, so they get the interest instead of the company with the charge. Agree to continue making extra payments to eliminate the extra £15,000 if they want you to. If IF won't do it, you can forget all chance of getting it done. Asking for money to let you default on another secured loan is likely to go down like a lead balloon.

Alternatively, cease making extra payments to IF until you can accumulate enough to get rid of the charge with a settlement. This is probably your most realistic option.

Expect that a settlement with a shortfall of £15,000 will greatly harm your credit rating for many years.

You have a truly lousy case from a lenders viewpoint. Don't expect to have much success except by the saving the overpayments approach.

tough crowd here :eek:

James, the new business is in it's second year of trading, first year did close to £300K as a one man band, hardly unprofitable.

A lot of hard work has been put in since and we own that work as IP's in Games and Apps which will be going live towards the end of the year.

As I say, we are not in this to be serial debtors, so not asking for money to then crash again. There is a bigger perspective here that needs some open thinking and the fact that this is not also 'negative equity' post.

Thanks

flyinglizard

flyinglizards

Dave_Ham wrote: »

Ok, banks are greedy for cash at the minute with historic debtors like this situation. Your issue is that they have a charge on the property for a fixed amount.

A deal before CCJ, is much easier than after (although accept your challenging situation)

You can approach whoever is now holding this debt and state that you can only borrow £x and would they be willing to do a deal? They can only say no and it does not affect your income and expenditure as raising from house.

Say they do accept a deal, or you choose to raise the finance and pay it off in full at face value you have 3 new challenges.

1. Credit Score - With a CCJ registered in the last year, there are only a few lenders that would tolerate this.

2. Income/Affordability - With a business failing and new one not yet profitable, not sure on what your income/affordability looks like

3. Losing the rate you have to be replaced by another..

Given your equity, there will always be solutions although you will need an experienced broker and probably charge a fee. The mainstream fee free players will not be likely to solve this.

The solutions are likely to be more expensive also. You could take a second charge secured loan to repay the CCJ debt and also the unsecured debt and thus having the majority of your mortgage on the preferential 2.5% rate and the smaller, newer amount on the much higher priced second charge.

A lot going on, so formalised regulated advice would be the next best step.

Good luck

Dave,

Thanks for the positive post, it really lifted me :T

Hopefully my post which crossed yours replying to James, gives a bit more, but that sounds like a plan:T

Kind Regards

flyinglizards

Dave_Ham

You will get all opinions on here and like any opinion, not all are correct.

Whilst worded harshly, the trading figures of the business and/or what your income was and how structured will be defining to any mortgage lender.

Good equity usually equals more solutions, but it is hard to achieve finance in the current climate.

By all means ask away any additional questions..

jamesd

flyinglizards wrote: »

tough crowd here :eek:

Trying to be realistic, not mean.:)

flyinglizards wrote: »

James, the new business is in it's second year of trading, first year did close to £300K as a one man band, hardly unprofitable.

I based that on your original "allowing us to concentrate on our new business which is about eight months away from being profitable".

If that new business is already profitable that'd surely help a lot. Your accountant preparing actual trading figures and projections based on a partial second year might also help with whatever the first year figures say.

I hope that you're successful with this, just think it'll be a tough one. I'd be very pleased to read later that you managed it!

flyinglizards

jamesd wrote: »

Trying to be realistic, not mean.:)

I based that on your original "allowing us to concentrate on our new business which is about eight months away from being profitable".

If that new business is already profitable that'd surely help a lot. Your accountant preparing actual trading figures and projections based on a partial second year might also help with whatever the first year figures say.

I hope that you're successful with this, just think it'll be a tough one. I'd be very pleased to read later that you managed it!

Thanks James, I really appreciate that.

This has been a long time working through this, probably back to 2005. I ended up defending myself in Court twice, first time the Bank could not even produce any overdraft agreement with my signature on.

:beer:

Cheers

flyinglizards