Bridging loan repossession

holypocketsbatman

Hi All,

Hope this is the right place to post

I hope someone can help. We live in a flat in London. My mother-in-law inherited it from my father-in-law but as the mortgage was non-transferable, she had to take finance. her mortgage broker told her that she couldn't 're-mortgage' until she had owned the property herself for over 12 months. Therefore she had to take a bridging loan. 12 months go by and the bridge is due, but re-mortgage companies won't consider her application until then, so she manages to extend the bridge for a further 6-months. Unfortunately, she then finds it nearly impossible to get a new mortgage, this is because of 1 credit card that she took out after her husband's death. It ended up taking some time for probate to be granted and so she missed a run of payments on that card, all her other credit is perfect, but that just kills it.

the few that say yes send valuers who significantly undervalue either the property or the rental potential (she is taking it on a BTL and we're going to rent it from her for the time being).

Because of these failures, the Bridge which was due at the begining of June 2013 is stilll outstanding. We've been in contact to explain that we're trying various options, but as the interest payments are £12,500 plus £10,000 arrangement fee each time, which we can't clear until remortgaging.

Anyway, she's now had a claim for possession and I'm not sure what to do. Any help would be greatly appreciated.

We really want to keep it if we can both for the sentimental reason that it's the last thing my wife and her father worked on together and for the pragmatic reasons that it has a potential for allowing another investment.

I think that, given a few months, we can either refinance it or at least do what we need to do and sell at a good price if that's what we need to do. Can anyone suggest what we should say to get that?

Thanks so much

Dave_Ham

Hi there,

Apologies, will have more questions that answers at moment.

What is the value of the bridging finance and approximate value of the property in question.

Who officially owns currently (just Mother In Law ?)

What exactly is listed on credit file, number of missed payments or default?

How old is MIL?

holypocketsbatman

Hi Dave,

thanks for the reply. Here are the answers:



What is the value of the bridging finance and approximate value of the property in question. The bridge was for £1M and they now want about £1.2. The property value is a question, it was valued at £1.35 2 years ago by a very reputable firm, trying to refinance, however, one firm put it at £1.2 with a rental of £5900pcm, for the second go a very large country wide firm put it at £1.35 with a rental figure of £3200! the average increase in the area over the past 2 years has been 22% according to Zoopla and Mouseprice.

Who officially owns currently (just Mother In Law ?) Yes, just MIL officially

What exactly is listed on credit file, number of missed payments or default? she has a 5 on that card, we asked them as a gesture of goodwill to change it to a U, asked several times in fact, but Santander said no

How old is MIL? she is 65. She still works 2 jobs and has a good income in addition to her state and private pension

Thanks so much for taking th etime to help

Dave_Ham

Working on a best case scenario of £1.2m vs £1.35, I cannot get my head around how this is even got to an application.

On a buy to let basis, typically you require 75% loan to value minimum on these values. Are these what was put on application?

I cannot believe if these values were accurate, how bridging was obtained and what exit route they were looking at?

Are these figures definitely correct? if so then not good news coming I am afraid..

holypocketsbatman

Thanks for the reply,

That's the problem, because the previous valuations suggested a much higher value, then we looked good until the new valuations (the previous valuation was also in line with the higher amount.) If the property had increased in line with the area (and actually we did a lot of work since then) it should be in excess of £1.62. The problem we had is that the first (1.2) was a surveyor with not much London experience and the second was in the flat for less than 5 minutes, most of which was spent trying to get his tablet computer working. In other words, I think we've been unlucky with the valuations. Add to that that the second valuation was from a big country wide surveyors and I think they tend to undervalue since the economic drop.

Anyway, as I say best case is that we refinance,if we can't we would like to buy at least 6 month to finish some things off and sell at the best price. Any idea how we might stop the repossession until then? Particularly without damaging MIL's credit rating further

Thanks for your help

Dave_Ham

Ok, I get it.

Credit file is a consideration, whereas both market valuation and rental valuation are the biggest issue.

Do you and partner earn enough salary wise (needing to be circa £250k a year joint) in order to purchase the property? (assuming MIL cannot get buy to let finance)

Issue is the overall value as many smaller buy to let lenders will cap the values beneath this..

Typically a court will take its time and drag its feet selling via a repo, although be careful as a commercially owned property can be fast tracked, although this is not be specific field of knowledge..

Thrugelmir

holypocketsbatman wrote: »

If the property had increased in line with the area (and actually we did a lot of work since then) it should be in excess of £1.62.

Properties are in themselves individual markets. Average area increase has no bearing.

holypocketsbatman

Thanks for the responses. We went to the court and filed an application for an adjournment because MIL is away trying to release funds and has been taken ill. She also let the Bridging lender know via e-mail that this was happening and proposed an extension of several month, during which time she would immediately put the place on the market whilst pursuing one last finance option. We put the N244 form in yesterday and the hearing is tomorrow. The judge has said he'll deal with it at the time of the hearing. Meanwhile the lender has replied sayign they will resist the adjournment and seek to get a possession order and and order for the outstanding sums. but that we're free to try and sell or refinance after the hearing, which I don't really understand.

Is there anything we should do before the hearing tomorrow, such as submit a defence even though MIl won't be there to defend in person?

I know as well that different houses move prices at different rates, but the recent valuations suggest that the value either hasn't moved or has even gone down in the past 18 months despite not being finished 18 months ago and now being refurbished to a very high standard in an area wher eproperty prices have been rising at 10% a year for the past 2 years.

Thanks again

Thrugelmir

Did you seek legal advice in preparing your defence?

Are arrears amounting for unpaid interest on the bridging loan?

holypocketsbatman

Sadly no, it's all a bit complicated as MIL isn't here and we were relying on an adjournment and coming to an agreemet with the lender to buy us enough time to sort something out.

No we don't know what to do as, if they go ahead with the hearing, it will be undefended and likely go badly, but MIL isn;t really in a fit state to take part and also, I suppose if she miraculously provides a defence when it looks like the adjournment isn't going to go ahead (ie, we do it for her) it'll look a bity dodgy. Also, even if she fills in the defence, there's no way she can make the hearing or even take part in a telephone hearing.

I'm not quite sure what happens if tomorrow's hearing goes ahead and they issue a rapid warrant, as in what scope we have to appeal or what time frame it will be.

thanks for your help.

holypocketsbatman

The hearing is in an hour, any thoughts?

Thanks