How would be best to handle debt on house?

mattyjw

Hello,

My father died this weekend leaving my mother in a house with £80000 secured on it via two loans, both of which have been defaulted on and cost around £900 pcm to service. The arrears and poor credit means she will not be able to remortgage, is there a way that I can take out a mortgage on the property to pay these debts and reduce the payments to a more manageable level,

I have been saving for a deposit of my own but now feel I must protect the roof over her head as well as my own currently. My salary is only £17k currently and so i would prefer lower monthly payments and to keep the house is this possible to achieve?

ACG

How much is the property worth?

SomeIdeas

sorry to hear about your father.

I was told somewhere, that as a rule of thumb, lenders will give you 4x wage- so £68k (a few people I know were offered over this), take a look on comparison sites to see what you can get.

The longer term the mortgage the lower the monthly repayments. Interest rates are low at the moment, so a long term might be the way to keep it affordable.

I can't offer any solid advise sorry, hope the MSE forum serves you well!

mattyjw

The house is worth around £140,000. My mum earns about the same as I do, and I have £12k available in savings for a deposit on my own property, or at least it was.

ACG

Depending on your mums income/age etc it might be possible for her to get a mortgage in her own right due to the loan to value.

However 4x income is the norm, its possible to get 4.5x or even 5x but i think 4x is more realistic. You could also negotiate with the current lenders and offer a final settlement figure or arrange to make any shortfall payments over a set period.

mattyjw

The problem is she is named on the mortgage with my dad and has a bad credit rating so I don't believe that anyone would lend to her which is the root of the problem we're in at the moment. I was reading about gifted deposits and was wondering if I could get around £70000 as a mortgage and buy the house from her so that it was more secure, she is 56 at the moment and has extended one of the loans to reduce repayments, but I thought I could get a 25 year mortgage so the cost was lower.

ACG

the LTV is quite low, there is also an underlying reason for the adverse which will help when explaining it to a lender - which is why it may be possible.

But doing it in your name should also be possible.

There will be a few different options and it all depends on your preference really.

mattyjw

I would really just like to keep the roof over my head, the current lenders have loaded the interest upto 9% in one case so i felt i may be able to get a better deal under my name, but i'm not currently on the mortgage so I don't know how it might work without buying the property and then having all the costs connected to it.

ACG

Probably best to speak to a broker.

There are a few options:
You take out a new mortgage - in which case you would also have to become the new owner.
You take out a joint mortgage - in which case you would have to become joint owner.
Your mum takes out a new mortgage - a mortgage lender who accepts adverse, but the rates would be less than 9% (probably closer to 6% at a guess).

Some of those options may not be available (it will depend on the finer details) or there may be other options also available but i think you both really need to sit down with a broker and discuss through the options.

mattyjw

Yes I think your right also I forgot to mention my mum has ccjs against her aswell which I suppose would push towards the house being put in my name and the mortgage too.

ACG

Possibly but again it will come down to the finer details. Some lenders look at the overall picture (they look at the rest of the credit, whether there are underlying reasons, affordability etc) to make a decision.