Complicated Remortgage

mrshoopfish

Hi all, hope someone can help.

My mother and grandmother owned a property, tenants in common.
My grandmother died and left her half share equally between myself and my brother. So now mother has 50%, brother and myself have 25% each.
I wish to extend the property and move there with my husband and baby on the way.
The property is worth just over £500,000 with an existing mortgage with Santander for £58,000.
I would need to remortgage or take out a seperate mortgage (of course with santander) to finance the works, which probably are going to amount to £70,000. The names have not yet been transfered on the title deeds, but I have spoken to a solicitor re this, she can deal with this once we have a mortgage offer.
So my brother wants to protect his interests and be named on the deeds which will mean he will have to be named on the mortgage also I believe. My brother and I are both self employed, my gross is a mere £13,000, his must be nearer to £25,000. My mother is 61 so I have been told that for her to remain on the mortgage her age would be an issue.

What are the chances of us as self employed individuals getting a mortgage, and if anyone has any suggestions as how we should move forward that would be great!
Thank You

mrshoopfish

Oh I need to add that my mother will remain at the property and we are extending with an annexe

whitewing

Will your husband be on the mortgage?

holly_hobby

Essentially, all those named on the deeds need to be party to the mge - of which upto 4 individuals may be joint mortgagors (although generally only 3 incomes will be assessed, on a typical scenerio of 3 & 1 & 1 - or a variation) .

So, as Mum is already on the deeds, she will need to be party to the mge (with all but 2 lenders whom may consider her remaining off, but they are tight on underwriting). So we are realistically looking at a remortgage for a total of 128k (existing 58k & 70k equity release), with a simultaneous transfer of equity exercise (ie adding you and bro to the mge deeds).

An issue with some lenders may be that they want you to have been on the deeds for at least 6 mths pre any equity release exercise - whilst some will not - so that part will be a suck it and see exercise, and I would use a broker to minimise time and effort.

As bro wants to be on the deeds, he will need to be party to the mge (as you know), and his net income (after deducting his own financial commitments inc existing mge etc), when added to yours will have to be sufficient to svc the mge.

The other issue, is the building of an annex - to which you may want to check planning permissions, and if the lender will be happy with the addition of the annex as it can make a property less attractive on the open market (ie upon forced sale).

If the mge can be serviced without Mums income, then her age won't be too much of an issue, but if its reqd, then yes your max term will be restricted by her age (although there are a couple of lenders whom don't have an upper age restriction if the applicants income is sufficient throughout the mge term).

There are a few issues with this, but the super low LTV will oil the wheels on this one, and I do think there will definately be a home for this, but realistially I would suggest you need the assistance of a broker to push this through with the least legwork on your part - don't forget to run this & the TOE past the current mortgagor too (which may result in lower fees than will be incurred on a full remortgage to an alternative provider)

Hope this helps

Holly

antrobus

mrshoopfish wrote: »

...My grandmother died and left her half share equally between myself and my brother. So now mother has 50%, brother and myself have 25% each....So my brother wants to protect his interests and be named on the deeds which will mean he will have to be named on the mortgage also I believe.

Well, yes, your brother does own 25% of the property, so once probate is done and dusted, the 'deeds' will reflect his fact. And as a general rule, lenders will want all the legal owners of the property to sign up for the mortage. (Just in case they do have to repo, you understand.)

What I think you also need to do is speak to the solicitor about getting a deed of trust to set out the rights and responsibilities of the various parties. You need to get a £70,000 in order to extend the property so you can live in it. Presumably you'd want to ensure that the benefit of that expenditure accrues to you, whilst your brother and mother would want to protect themselves (as far as is possible) from getting lumbered with the debt. Your brother may decide at some point in the future that he wants to cash in his inheritance, and so forth.

holly_hobby

All mortgagors are jointly and severally liable (pursuable) for the entire mge debt (regardless of how the deeds are held - joint tenancy, or tenants in common) - the DOT would only be applicable upon disposal of free equity on sale, but would have no influence upon how the lender would manage the debt on forced possession, or to what extend the mge debt is apportioned, regardless of any TIC arrangement (as noted above).

If the bro wanted to release his share in the future, this would involve a further TOE removing him from the deeds and mge - and that can only be achieved if the remaining (inc any replacement) mortgagor's income can continue to svc the remaining debt, if not, then he's stuck or alternatively he could seek to force sale to release his interest and capital.

Hope this helps

Holly

mrshoopfish

whitewing wrote: »

Will your husband be on the mortgage?

Hubby is happy to not be on the mortgage...don't know if it would be better or even necessary for him to be?! He is employed which I thought might be helpful.
I guess the issue might be the fact that he will have to then be on the title deed (an issue for other family members that is).

mrshoopfish

holly_hobby wrote: »

The other issue, is the building of an annex - to which you may want to check planning permissions, and if the lender will be happy with the addition of the annex as it can make a property less attractive on the open market (ie upon forced sale).

I have consulted a planning consultant about the extension, all should okay.

If the mge can be serviced without Mums income, then her age won't be too much of an issue, but if its reqd, then yes your max term will be restricted by her age (although there are a couple of lenders whom don't have an upper age restriction if the applicants income is sufficient throughout the mge term).

I did speak to mum re coming off the deeds, she would do that as long as we had the declaration of trust sorted to state the obvious!


There are a few issues with this, but the super low LTV will oil the wheels on this one, and I do think there will definately be a home for this, but realistially I would suggest you need the assistance of a broker to push this through with the least legwork on your part - don't forget to run this & the TOE past the current mortgagor too (which may result in lower fees than will be incurred on a full remortgage to an alternative provider)

Hope this helps

Holly

Thank you very much this has been of great help! A mortgage broker it is, hopefully this coming week sometime!

mrshoopfish

holly_hobby wrote: »

If the bro wanted to release his share in the future, this would involve a further TOE removing him from the deeds and mge - and that can only be achieved if the remaining (inc any replacement) mortgagor's income can continue to svc the remaining debt, if not, then he's stuck or alternatively he could seek to force sale to release his interest and capital.

Bro has said he would like in the future, when he is ready, to 'extend' the mortgage to allow for his purchase of a property. I was unsure whether this would be possible or if there would be enough equity in the property to provide what he will require This is basically why he wants to be on the mortgage.

holly_hobby

I did speak to mum re coming off the deeds, she would do that as long as we had the declaration of trust sorted to state the obvious!


If you remove Mum from the deeds, then you are essentially purchasing the property from her (at a discounted pch price), and given that she will be remaining resident post completion, will primarily cause issues re vacant possession requirements of the lender (due to beneficial ownership & possession issues) - and which they won't accept - and secondly would be cited as deprivation of assets if the event of mum seeking any MT benefits including future application for state funded long term care.

Hope this helps

Holly

holly_hobby

mrshoopfish wrote: »

Bro has said he would like in the future, when he is ready, to 'extend' the mortgage to allow for his purchase of a property. I was unsure whether this would be possible or if there would be enough equity in the property to provide what he will require This is basically why he wants to be on the mortgage.

Well this will depend upon the supporting income of the mortgagors, ltv etc, and under the joint and several (individual) liability, if you/other mortgagors would be happy to be legally responsible for the increased and total mge debt incorporating Bro's further "capital withdrawal" .

Hope this helps

H x