Help - Mortgage confusion!

cat_shark

I have a residential mortgage and am now in a quandary. When my mother became terminally ill I was travelling from Portsmouth to Devon every weekend to support her and my father. In the end I was staying longer and longer in Devon. I was spending less time at my property and when my mother died my father was really struggling and developed health concerns of his own, so I moved in on a temporary basis to help. During this time my property was empty. I then decided to rent it out via an agency whilst I supported my father. I contacted my mortgage company asking if my mail could be sent to Devon and told them I had rented out my property, albeit temporary. My mortgage company said I had not sought approval and have now said I have to undertake a phone interview whereby I will have to pay an additional annual charge of £780.00 and potentially transfer onto a higher rate mortgage. I will not be able to afford this and as it stands in spite of renting out my property I still have a shortfall to make up the monthly mortgage payment of £335.00, so this is not a profit venture. There are other added complications. My father's property is worth £300,000 and he has an interest only mortgage of £50,000. My father has asked if I would take over his mortgage. With my own mortgage it is also interest only and I also have an unsecured loan with the same mortgage company of 20,000. One option would be to take over my fathers mortgage as it has four years to run and my parents wanted me to take it over after this time. I could sell my property, which is unlikely to meet what I paid for it, so if I was to sell it, I estimate I would probably lose 10k and plus the loan would end up with 30k deficit, but if I was able to transfer this to my fathers mortgage, I would then be paying a mortgage of 80k as opposed to 135,00k plus loan of 20k and having sold my property I would not have to make up the mortgage shortfall. This seems like the best option all round as I can then also support my father. I am just worried about the phone interview with the mortgage company and what I should tell them. Any thoughts much appreciated.

Tigsteroonie

You don't 'transfer' debt from one mortgage to another, you take out larger mortgages and use those to repay existing debts.

So my first question is - what is your income, and will it sustain an £80K remortgage of your father's property? Are you still managing to hold down your job in Portsmouth whilst being based in Devon?

amnblog

If you plan to live with your father you should get some advice from a mortgage broker as to how to handle these two mortgages.

cat_shark

thanks for the responses. Yes, a mortgage of 80k is better than my current mortgage of 135k plus 20k unsecured loan. This is based on selling my property of course. I could not sustain both mortgages. I would sell my existing property and then take on my fathers mortgage I guess.

silvercar

Sorry for your loss.

You really need to extract some bare figures from your first post.

Your property: value 125k, mortgage outstanding 135k, secured loan 20k,

Dad's home: value 300k, mortgage 50k.

Is that right?
Who owns your Dad's home? Was it jointly owned and automatically became your dad's, or is there a possibility that you could inherit (by deed of variance) your mum's share. If you want to take over your dad's mortgage in any way, you will need to go on the deeds. This means you become a part owner. Do you have siblings?

If your dad gifted you the property, this becomes a problem if he needs long term care and doesn't have the cash to pay it. (google 'deprivation of assets').

On your existing property,, your lender would need to consent to the sale if it didn't clear all the mortgage.

I am just worried about the phone interview with the mortgage company and what I should tell them.

Tell them the story as you have told us. Play the sympathy card, you didn't do it for profit but to help family at a difficult time.

cat_shark

Basically my current mortgage is 130k and I have an unsecured loan with the same provider of 20k. So I suppose because the loan is unsecured it does not have implications for my mortgage. My property has been valued between 120k - 130k, but to get a quick sale I am guessing it would need to be nearer to the 120k.

My fathers property passed to him when my mother died. No there are no siblings, just me. My father is keen I continue to support him and I reassured my mother I would before she died. Because she used to do everything financially he gets in a bit of a muddle, but I am trying to enlighten him as best I can.

My job allows flexibility of location fortunately.

amnblog

if your lender is who I expect it is, paying off the mortgage markedly increases the rate on the unsecured element should you keep it

lonestarfan

What's your annual income and are you on a permanent contract?
What's your credit history like eg any ccjs, defaults, late payments

cat_shark

I work via an umbrella limited company and have done so for the last three years. Prior to this I worked for the local authority for 12 years. I have had a mortgage since 2006 and have never missed payments or been subject to any ccj's or similar so think my credit history is good.

cat_shark

oh yes my annual income net is 29k net.

silvercar

cat_shark wrote: »

Basically my current mortgage is 130k and I have an unsecured loan with the same provider of 20k. So I suppose because the loan is unsecured it does not have implications for my mortgage. My property has been valued between 120k - 130k, but to get a quick sale I am guessing it would need to be nearer to the 120k.

My fathers property passed to him when my mother died. No there are no siblings, just me. My father is keen I continue to support him and I reassured my mother I would before she died. Because she used to do everything financially he gets in a bit of a muddle, but I am trying to enlighten him as best I can.

My job allows flexibility of location fortunately.

All looks doable, except that for you to take the mortgage the property needs to be in your name or joint names. If you just sell up and move in with your Dad and pay his mortgage, you will have to keep the unsecured loan going and take another loan to clear the mortgage shortfall. All possible, but the interest rate on the unsecured will jump to possibly 12% if you don't have the mortgage - assuming it is NRAM.