Mortgage predicament due to pending divorce

eatsleaves

Does anybody know if a 'release of land' would also constitute a new mortgage application.

The scenario is:
1. A's property has a large outbuilding and had thought about applying for a change of use to residential.
2. A is thinking about dividing existing house into flats (subject to lenders permission) and selling 1 small flat to release the funds to settle the divorce with B.
3. The potential value of the converted outbuilding would be at least as much as the value of the small flat to be sold.

I understand that the mortgage must stay within the lenders stipulated 75% LTV, but if the lender was satisfied that they still had their 25% security, even if the small flat was sold, due to the value of the converted outbuilding, would this be an option without having to make a new mortgage application? Thanks in advance.

Dave_Ham

I am struggling a tad with the A, B & C's, but it would certainly be a new application.

This is incredibly unlikely to be able to be pulled together. Furthermore if A (I think) has been struggling with a 1.5% interest only mortgage, he/she will certainly struggle when they enter the current climate and if achievable hit a repayment mortgage with higher rates.

I genuinely think this needs to go back to the drawing board. I would be telling B (I think) to wait for the money or sell the property and he/she will get 50% of the profit for a quick sale which will not be much.

Good luck

eatsleaves

Many thanks and sorry for the A,B etc - I've used that form to hopefully protect the privacy of property owner/friend/A!

To clarify, the property owner is not struggling to pay the interest only mortgage, just can't raise the £25,000 to settle, but is looking at all avenues to be able to settle but not lose the house and mortgage, as it's very unlikely they would qualify for a new one.

Dave_Ham

Understand entirely, the mention of bad credit in the background made me think that missed payments or worse suggested that they may be struggling.

I would be surprised if this has a solution, although much will depend upon how bad is determined in credit file terms.