Implications of transfer of equity

THS

I am considering lending £15,000 to someone to get their business started in return for a healthy profit.

As security they have offered to add me to the deeds of one of their properties. I am trying to work out the implications of this but everytime I think I understand I confuse myself with questions. If anyone could help with the pros and cons or what I need to consider, that would be much appreciated.

House value is £170,000
Outstanding debt is £90,000

Or if there is another other way I could secure the loan/investment??

Thanks

kingstreet

If there's a mortgage on the property, you can't be added to the ownership without becoming a party to the mortgage.

Easiest way for you to handle this is by second charge. You lend the money and put a charge over the property until it is repaid.

THS

kingstreet wrote: »

If there's a mortgage on the property, you can't be added to the ownership without becoming a party to the mortgage.

Easiest way for you to handle this is by second charge. You lend the money and put a charge over the property until it is repaid.

Thanks. That's what I thought about the mortgage. Does that mean if he couldn't pay I'd have to take on the repayments? If he missed payments it'd affect my credit rating, right? Obviously this is worst-case but I need to understand it all.

I'll investigate second charge as I haven't heard of it- sounds promising! Thanks again

kingstreet

If you become a party to the mortgage, you would be responsible jointly and severally for 100% of the mortgage payments.

THS

kingstreet wrote: »

Easiest way for you to handle this is by second charge. You lend the money and put a charge over the property until it is repaid.

Any idea how to facilitate this? Looked online but can't seem to find anything relating to private lending.

ACG

A solicitor.

THS

Sorry to be a pain.

Quick question because the solicitor's office is closed.

If a Second Charge is applied and he isn't able to pay me back but is still covering his mortgage repayments is there no way I can get my money back until he chooses to sell his property?

Hope that makes sense.

Goldiegirl

A second charge holder can apply for possession of the property.

If possession was granted, you then have to decide what to do with the property, and you'd also need to pay off the first charge. The solicitor would make sure you didn't get any money until the first charge was removed.

Could be very expensive with legal fees etc.

Thrugelmir

THS wrote: »

I am considering lending £15,000 to someone to get their business started in return for a healthy profit.

As security they have offered to add me to the deeds of one of their properties.

If it's that profitable an opportunity why doesn't your friend raise the funds themselves. Ok you have a charge. But you've still got the problem of recovering the debt which could be a highly expensive business.

THS

Thank you everyone for your help. I have now been able to make an informed decision and have decided not to invest at this point.

I have really enjoyed doing my research though and have learnt so much...investment forums here I come!