My retired mothers interest only mortgage expired - please help! :(

TLOR

macman wrote: »

So £29K of that £80K is still on a repayment mortgage? When does that term end then?
I have to ask-where has the £50K gone that she borrowed 5 years ago against the property?

I am not 100% sure but I believe the remortgage was timed to finish at the same time as the repayment part, I will double check.

She took it out for several reasons, to help family members, debt consolidation and although it seems like a bad idea now it actually stopped the bank perusing my fathers interest in the property (as the main mortgage payer for many years) when he got into trouble and ended up on pay plan later on.

If I can get her in a nice bungalow with circa 16K in the bank and their pensions they would be happy with that. The bills the are currently paying for a 3 bedroom house are also way too much.

holly_hobby

"I believe my mother purchase the property originally for around 40k, this was a replayment mortgage which is now down to about 29k.

She took an additional secured mortgage out 5 years ago on a 5 year interest only basis which took the total up to circa 80k as mentioned."

So she owes 80k on IO ? Of which 50K is IO and the remaining 29k or so, is on a repayment basis (which will be completely repaid at the end of the scheduled mge term under the regular capital and interest payments being made). Although having only repaid 11k in over 20 yrs seems inaccurate - have you checked your figs ?

If so, this means she has circa 50k free on sale ... (ie propery sells for 100k, os IO of 50k, with 29k repayment having been paid off under the terms of the mge. )

You can pch a property and rent it to parents, this will be under a regulated buy to let arrangement - where assessment is based on 2nd property criteria (ie based on your income & existing commitments, and not rental income), with a max ltv circa 75%).

Yes you can rent to family and they receive HB if qualifying - if it is a full commerical arrangement, inc AST and market average rent.

If you pch a property for parents, then all funds, including the deposit, MUST come from you.

If the idea is for parents to reside and also contribute any of the deposit, then this will be rejected by lenders, as it affords them beneficial rights (affects any possession order) - so the whole deposit must come from your own funds (as oppossed to a gifted deposit, even from anyone other than parents, as generally they aren't accepted under BTL borrowing)

Hope this helps

Holly

TLOR

Cornucopia wrote: »

It does seem as if there has been persistent and repeated bad advice.

Please could you expand on your post as I would hate to pass on bad advice?

macman

If the original mortgage was ?25 years and less than 40K, how can she have only repaid £11K (40K-29K) five years ago, 20 years into a repayment mortgage?. It doesn't add up.

TLOR

holly_hobby wrote: »

"I believe my mother purchase the property originally for around 40k, this was a replayment mortgage which is now down to about 29k.

She took an additional secured mortgage out 5 years ago on a 5 year interest only basis which took the total up to circa 80k as mentioned."

So she owes 80k on IO ? Of which 50K is IO and the remaining 29k or so, is on a repayment basis (which will be completely repaid at the end of the scheduled mge term under the regular capital and interest payments being made).

If so, this means she has circa 50k free on sale ... (ie propery sells for 100k, os IO of 50k, with 29k repayment having been paid off under the terms of the mge. )

You can pch a property and rent it to parents, this will be under a regulated buy to let arrangement - where assessment is based on 2nd property criteria (ie based on your income & existing commitments, and not rental income), with a max ltv circa 75%).

Yes you can rent to family and they receive HB if qualifying - if it is a full commerical arrangement, inc AST and market average rent.

If you pch a property for parents, then all funds, including the deposit, MUST come from you.

If the idea is for parents to reside and also contribute any of the deposit, then this will be rejected by lenders, as it affords them beneficial rights (affects any possession order) - so the whole deposit must come from your own funds.


Hope this helps

Holly

Hi Holly,

You raise a good point as I am pretty sure my mother said that there is 29k remaining on the repayment so that would suggest that that mortgage hasn't expired! Not sure that would make much difference mind as the 50k is still due although I guess they will at least be repaying some of the debt over the coming 18 months or however long it takes to resell.

If I was to purchase a property for my mother it would be my deposit, although I understand you are quoting "by the book" best practices this is the type of practice that is often hard to police of course (what is stopping the current tenant giving the money back months if not years down the line).

Likewise, if I decided to purchase the property to live in as a second home on a residential basis and then after the mortgage went through I then decided to let the property that would be my prerogative (as long as then let the mortgage provider know I had subsequently decided to let it)

TLOR

macman wrote: »

If the original mortgage was ?25 years and less than 40K, how can she have only repaid £11K (40K-29K) five years ago, 20 years into a repayment mortgage?. It doesn't add up.

I agree, and I have said numerous times above that I will speak to her and ask (I am at work now so can't call her). I can only presume that there is a previous remortgage that she hasn't mentioned or forgotten! (It is not that easy getting this type of financial information out of proud parents as I am sure you understand)

Cornucopia

TLOR wrote: »

Please could you expand on your post as I would hate to pass on bad advice?

Not in the thread - in the financial history behind the thread topic.

Thrugelmir

TLOR wrote: »

Likewise, if I decided to purchase the property to live in as a second home on a residential basis and then after the mortgage went through I then decided to let the property that would be my prerogative (as long as then let the mortgage provider know I had subsequently decided to let it)

No its not your prerogative. Standard mortgage contract wording is that approval has to be applied for and is granted at the lenders discretion.

holly_hobby

TLOR wrote: »

Hi Holly,

You raise a good point as I am pretty sure my mother said that there is 29k remaining on the repayment so that would suggest that that mortgage hasn't expired! Not sure that would make much difference mind as the 50k is still due although I guess they will at least be repaying some of the debt over the coming 18 months or however long it takes to resell.

There can't possibly re 29k os on repayment (from an original 40k C&I mge), if there is only 18 mths left till the end of term (unless there has been significant arrears/roll up of arrears). So either the info re the amount OS on repayment and/or the remaining term is inaccurate - as the figs don't jell !

TLOR wrote: »

If I was to purchase a property for my mother it would be my deposit, although I understand you are quoting "by the book" best practices this is the type of practice that is often hard to police of course (what is stopping the current tenant giving the money back months if not years down the line).

Prosecution of all connected parites for a fraudulent application.

TLOR wrote: »

Likewise, if I decided to purchase the property to live in as a second home on a residential basis and then after the mortgage went through I then decided to let the property that would be my prerogative (as long as then let the mortgage provider know I had subsequently decided to let it)

No, that would be a breach of mge terms and conditions (with possible immediate requirement of repayment), if you didn't seek the lenders permission to let (refered to as Consent to Let).

Sorry to burst the bubble on those 2 !

Hope this helps

Holly x

TLOR

Thrugelmir wrote: »

No its not your prerogative. Standard mortgage contract wording is that approval has to be applied for and is granted at the lenders discretion.

It maybe in the small print but it is rarely refused, so effectively I'd say it is but I accept the bank could refuse. I have had not had a issue on the two occasions I have done this in the past though, it was a very simple phone call to the lender who had no objection whatsoever. Peoples circumstances can change overnight and I am sure the last thing a bank would want would be to repossess a property that could only potentially have only 5% equity when the mortgage payments are being met.