2nd Charge/Declaration of trust - mortgage lenders?

Rzez

Hey all,

I am looking to remortgage from Santander due to a break up and have agreed a buy out for my ex partner. I've been having problems finding another mortgage company that will offer a mortgage with a Declaration of trust assigned to £20k of the property. This is from my mum and it only states that in the event of sell she will have a second charge on the property so she gets the money back after the mortgage company have taken their money.
After phoning a couple of mortgage companies and passing the affordability check they've declined to offer a mortgage due to this DoT. Does anyone know of any mortgage companies that can offer mortgages with one of these attached? As I can't find any underwriting rules or information on any mortgage companies websites regarding this.
The reason not wanting to stay with Santander is that I can't speak to an adviser before the 22nd August as they only do call backs and won't accept incoming calls (what a joke!)
Thanks in advance

holly_hobby

This sound suspiciously like a gifted deposit that was done so with reservation (and I'm guessing without the lenders knowledge of the reservation of interest).

Whom have you approached ?

Is there a 2nd charge actually registered on the property or is it simply a DOT thats in effect ?

You are having and will have probs placing this, because essentially the issue lies in Mum gifting you the 20k, but doing so in exchange for her beneficial interest in the property (you say that will come into play only on the lenders forced possession and sale), which will be a problem will all lenders due to the complications benefical interest presents with regards securing any possession order upon the mortgagors (your) default.

If its a 2nd charge thats in place, she would also have to agree to defer the charge (ie keeping it in 2nd place, as a mge lender always demands to be 1st chargee), AND you'll have to find a lender that will accept this arrangement - which as you have found out won't be straight forward.

Its important to also note, that as it currently stands, and if Santander agreed to this 2nd charge/notifiction of interest, that upon their forced or assisted sale of the property, if the repayment of the os mge exhauts the total sale proceeds, Mum will get nthing regardless of any 2nd charge/DOT or whatever is effected. If the DOT (re proceeds on defualt) was done so without Santanders knowledge, then essentially it'll be invalidated.

The only way to proceed is for Mum to accept that when she gifted you the 20k, she did so come warts'n'all ..... otherwise (and if Santander actually know and accepted Mums beneficial interest) you will be stuck with Santander, they being the only lender whom will allow you to leave Mums protection of funds in place.

This may be a bit simplistic, but why not repay mum her 20k (when/if possible) and release her interest, thereby solving the issue of requiring any 2nd charge/DOT ?

Hope this helps

Holly

Rzez

Thanks for replying so quickly Holly.Santander are aware of this, as they requested the second charge to be added to it. My mums a solicitor so we did everything by the book. I had a feeling this would be a pain from my experiance. If only you could actualyl speak to a mortgage advisor from Santander this would be a lot easier.

From what your saying it sounds like i'm unlikely to find anothe lender, so I appreciate your comment even if it's not the answer I wanted to hear

Let_Us_See

Why not go into one of Santander's branches? Normally much quicker, especially on a week day.

If the 20% loan (not gifted) funding from mother covers the whole of the deposit then effectively you are borrowing at 100% LTV and the reason lenders are reluctant to lend.

holly_hobby

Rzez wrote: »

Thanks for replying so quickly Holly.Santander are aware of this, as they requested the second charge to be added to it.

Ok so Mum has a 2nd charge registered, as she is a conveyencer she will understand what I mean by agreeing to defer the charge (this relates to succession of charging orders, which I'll leave Mum to explain). She'll also understand that having a 2nd charge does not give her a cast iron gte that her 20k would be repaid, on lender disposal.

So essentially what you are looking for is a lender whom will accept a deferred 2nd charge - this is how it should be presented to either the lender or broker you approach. There is no need to mention DOTs (which the charge replaces anyway), and also if possible don't explain its in respect to a gifted deposit (unless asked of course, when fibbing wouldn't be wise), and see where that takes you.

Of course whether this is a goer will depend upon the total ltv reqd as a result of the equity release re ex.

Can I ask, have you asked mum, given the possible placement probs of the 2nd charge, if she would release her charge to permit you to sort yourself out ? Given that she only wants to recoup the 20k, in the event of a forced possession (which i would hope is unlikely) - of course I don't know the relationship you have, or if the charge was so partner (now coming off the mge) wouldn't benefit from the monies, but worth an ask ?

Hope this helps

Holly

Rzez

Hi "Let us see",

The house is valued at £115k, with approx £73k left on mortgage and £20k of mums money. So there's a substantial deposit still in the property. I asked about going to a branch and apparently Santander only have 1 mortgage adviser in the whole of Bristol that goes to different branches each day, with his next appointment being the 22nd August. Might phone them up on the weekend and make a complaint as I find it un-acceptable that you can't wait in line to speak to an mortgage adviser and they have no availability on weekends or after 6pm on week days. They also suggest that you can only speak to the consultant that did the original quote, but after I did the first quote (on the phone) with them and phoned them up again, they said they had no record of it, even though the guy said he did a credit check on me!!
Might just be easier to sell the house. Thanks for your replys

Thrugelmir

Add your mother to the mortgage. Then a DOT could apportion the remaining equity along with protecting all parties interests. .

holly_hobby

Thrugelmir wrote: »

Add your mother to the mortgage. Then a DOT could apportion the remaining equity along with protecting all parties interests. .

Any TOE to add Mum, will be subject to status and affordability checks on Mum (re existing mge and commitments), with a possible added complication re a restricted/reduced mge term in respect of Mums age, and the remaining duration to max redemption age .... so possibly not an altogther simple solution, although based on the figs, and if mum wants to be jnt mortgagor (with the accompanying legal responsibilities), not a complete out and out no-goer !

Hope this helps

H x

Thrugelmir

holly_hobby wrote: »

Any TOE to add Mum, will be subject to status and affordability checks on Mum (re existing mge and commitments), with a possible added complication re a restricted/reduced mge term in respect of Mums age, and the remaining duration to max redemption age .... so possibly not an altogther simple solution, although based on the figs, and if mum wants to be jnt mortgagor (with the accompanying legal responsibilities), not a complete out and out no-goer !

Hope this helps

H x

My observation was made on the basis that there appears to be a lack of trust between the parties.

Rzez

Agreed I would never take money from mum, but she is steadfast. Unfortunately I couldn't afford to buy her out of the £20k as I can't borrow much more than £80k on my own.
With regards to adding her on.we would need to reduce the mortgage down to around 10 years which makes it less affordble for myself 18 years is comfortable.
Think I'm going to give Santander one last try and hope for the best. A massive thank u to u both. You've made me appreciate the situation from the other side which is exactly what I needed
Thanks x:T