Mortgage advice with bad credit or possible Remortgage at 65

MotherDear65

Hi. I'm new so please be gentle. I'm looking for some advice please. I want to remortgage my home to help pay off my son's mortgage.

I am a 65 years young widow, my house has around £1000 left on it's own mortgage with Nationwide. It's current estimated value is around £85k-£90k. I would want to remortgage for a minimum £50k but ideally £60k. My only income is through my private pension and state pension which come to £1010 a month.

My son will be making all the repayments (cannot get remortgage/loan due to bed credit rating, defaults etc) so this will not be a problem for me. The lender will probably differ though

Have I got a chance of getting what I want before I approach any lenders/brokers?

Any advice is welcomed and appreciated. Thanks in advance.

MotherDear65

edit: edited thread title to reflect swaying away from me remortgaging to now offering my son (ody1977) advice on getting a mortgage.. thank you for all your advice so far.

kingstreet

A traditional mortgage will very very difficult, if not impossible. The maximum term will make the payments more than your monthly income and that will result in affordability issues.

Your only option is equity release and this will not get you as much as you need to borrow.

Why do you need to pay off his mortgage? What's the problem?

MotherDear65

Hi, thanks for the reply. I was thinking some lenders would accept the term to finish by the time I was 75 therefore a 9 year term with payments around 700/month on a 60k mortgage. LTV would be around 70% and 4x multiplier on income before tax would allow over 50k as my pension take home would be £12120 a year net.

Or have I got it way out?

Son's mortgage is a long complicated mess and could involve losing his house. It involves partners, partners ex etc etc. Needs paying as soon as possible and getting deeds changed as mortgage won't entertain taking people off mortgage as bad credit history.

kingstreet

If you run an income of £12,120 through the Halifax affordability calculator, a 9 year term returns a mortgage amount of £24,085 for a top-class A-pass borrower.

Halifax is one of the more generous lenders, but at lower incomes, more of the income is taken up on "survival" expenditure, leaving less to fund housing costs.

At 4%pa, a £60k mortgage would cost £662 per month on a 9 year term and this would be considered well outside affordability IMHO.

MotherDear65

Would any lenders take into consideration my son's salary (£26k) and add him into the equation to get past the affordability hurdle? Or would his bad credit history put them off even more?

kingstreet

He cannot borrow money secured on a property which he does not own. You would have to carry out a transfer of equity, giving him a part of your home.

Your age would still limit the term with many lenders, but having done a TofE, his income would be includable.

His credit history is another matter. You haven't said what it is, but a history of defaults, court judgments and/or mortgage arrears would more than likely see a higher rate applied, a reduced amount offered or an outright decline.

It may be better for him to sell and discharge the mortgage, starting again in rented property.

MotherDear65

Thanks again for the reply and taking the time to help. He has 6 unpaid defaults which amount to around £20k from 4 years ago.. Due to loss of job. Been in steady employment since and hasn't missed payments on a loan and credit cards etc since.

Selling his house would be a problem. I will try to explain briefly. He has lived there for 12 years and paid the mortgage with his partner and her children. They now have children of their own together. The house is his partners and her ex partner. He has contributed nothing at all in this time to house or his children. They have joint mortgage together and the deeds are joint tenants. His partners ex was unwilling to sign it over until recently.

They have been trying for a transfer of equity but have been declined by the mortgage lender due to my son's bad credit and his partners non working due to ill health. So they cannot get rid of the ex even if they wanted to. The only other option is to overpay the mortgage and have it fully paid by the time the term is finished in 4 1/2 years. The major problem is that my son's partners health could change in that time and if the worst happens my son and their children will lose everything as they have 0 claim to a house he has paid for for the past 12 years. Or the ex may want more money in the future when finds out mortgage is completely paid and do a transfer of deeds instead of equity.

Guess it wasn't so brief hehe

Seems we hit a brick wall at every turn.

kingstreet

He definitely should not (nor should you) put any money into this house until the ownership is resolved.

Paying off someone else's mortgage simply results in them having all the equity, as you implied. Something needs to be done legally with the ex partner, before any mortgage repayment takes place.

It sounds like there is no imminent danger of the property being "lost" which I assumed to mean repossessed. I suggest he waits until the adverse credit falls off his credit file. Presumably there is insufficient equity in the property to pay off the ex and still make enough gap to approach an adverse credit specialist?

MotherDear65

I have just entered £12120 into Halifax mortgage how much can I borrow and it said upto £52,116... halifax.co.uk/mortgages/forms/minicalc/container.asp

Confused how you came up with £24085.

Am I on the wrong one?

kingstreet

MotherDear65 wrote: »

I have just entered £12120 into Halifax mortgage how much can I borrow and it said upto £52,116... halifax.co.uk/mortgages/forms/minicalc/container.asp

Confused how you came up with £24085.

Am I on the wrong one?

What term did you put in?

http://www.halifax-intermediaries.co.uk/tools_and_calculators/mortgage_affordability_calculator/default.aspx

It's possible our calculator is a bit more sophisticated than the one on the customer site. Use A for credit score and put in £60,000 as mortgage amount and see what you get. I didn't put any existing credit in, of course. You should, if you have any.

I've just used your link and there is no facility to add a term. It therefore makes an assumption, perhaps 25 Years?

kingstreet

If I input £12,120, one adult, A pass, no existing credit or dependents, I get £47,150 for a thirty year term on our calculator.

I don't know what Halifax uses on its customer site, but it may be misleading.