Loans secured against 'other' property..?

RainbowsInTheSpray

A friend of mine is in semi-retirement.

She owns her own house outright and does not work. She owns other properties, again non-'encumbered', and it is against these that she would like to raise c.£120,000. They are collectively worth maybe 3 - 4 times that amount but are not rented out.

Is anyone aware of whether this would be possible?

jonesMUFCforever

Does she have an income to be able to service the loan of £120k?

RainbowsInTheSpray

All her money comes from a small (c£7000 p.a. pension) and some non-verifiable sources.

She wants no prying into her circumstances in any event. She says she can afford something like £500/month. I have no idea whether this would be enough.

CLAPTON

just as an example, an interest only mortgage / loan at say 6% on 120,000 will cost 6x120000/100 =7,200 per annum... can she afford this?

financial_solution

Rainbowsinthe spray,

Yes it is do-able.

Your friend can certainly raise money against the properties, this is straightforward, how much she can raise depends largely on how much she is comfortable with as a repayment - does she really need the full £120,000.

It can be done without any intrusion into her personal circumstances.

However, due to the fact that she is semi-retired the lender "may" insist on her receiving Independent Legal Advice to ensure she is fully aware of the transaction and its potential repercussions.

Quick query: Why are the properties left empty?

Hope this helps.

Regards,

Mark.

jonesMUFCforever

Mark how can you possibly say that it is do-able on the scant information given?
Doesn't the fact that the OP does not want ''any prying into her circumstances'' raise any alarm bells with you, and the fact that only £7000 is verifiable income to service a loan of £120k !!

RichyRich

Lenders will often willingly advance loans that are unservicable provided sufficient collateral is offered. They do this less and less now with increased regulation from the OFT et. al. but it would almost certainly be possible to raise a mortgage against a property with a high enough LTV ratio to be recoverable by the bank. A mortgage is an almost cast-iron guarantee of repayment - if the borrower doesn't repay, the bank can sell the property.

The lender's suspicions may be aroused by the fact that the borrower wishes to secure the loan on property not occupied by her, but if there is sufficient equity to regain the principal then in the profit seeking world it is likely that a secured loan might be advanced.

Rich

Cumbrian_Male

RainbowsInTheSpray wrote: »

A friend of mine is in semi-retirement.

She owns her own house outright and does not work. She owns other properties, again non-'encumbered', and it is against these that she would like to raise c.£120,000. They are collectively worth maybe 3 - 4 times that amount but are not rented out.

Is anyone aware of whether this would be possible?

RainbowsInTheSpray wrote:

All her money comes from a small (c£7000 p.a. pension) and some non-verifiable sources.

She wants no prying into her circumstances in any event. She says she can afford something like £500/month. I have no idea whether this would be enough.

My bolds.

If I were presented with an application for a loan who's repayments exceeded income, I would assume money laundering was highly likely and would report it as such.

In her circumstances, she should sell some of her properties to raise the necessary funds.

financial_solution

RainbowsInTheSpray/EJones,

Perhaps I should have been more circumspect in the wording of my previous post.

Perhaps I should have said it "SEEMS" do-able. The proposed borrowers age may be an issue. The modest level of income wont necessarily be a deal-breaker but rather may lessen the sum available.

Due to the level of equity available it seems very do-able. This does not however necessarily mean that it is the best course of action to take....I also point out that I have queried whether £120,000 is necessary or, as would be more likely, a lower sum would be borrowed. I re-iterate that a lender may require the borrower to receive independent legal advice.

My queries concern why the properties are empty, the purpose of loan and the borrowers age.

Will the monies raised be used to provide any form of income?

Would the borrower consider selling one of the properties if the funds are a genuine requirement?.

Regards,

Mark.

financial_solution

Ejones999,

Further to my last post, the fact that the proposed borrower "wants no prying into her circumstances" does, at this early stage, not overly surprise me. Upon any "formal" enquiry and application, then, it would be necessary for any broker, adviser and lender to try to establish the legitimacy of the application. With many straightforward and genuine self-certified applications the applicant(s) want little or no intrusion into their circumstances. However certain enquiries would be made once the application has been made which should be discussed between the adviser and borrower prior to application.

The request for a level of privacy doesn't automatically mean an application is not straight. This is tentative initial enquiry on a forum, not a formal application, I shall reserve my right not to pass judgement on the proposed borrower until evidence suggests otherwise.

Regards,

Mark.

jonesMUFCforever

I understand now.
Never let a case of potential money laundering get in the way of a deal and more importantly commission.