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Three property shuffle - bridging loan?
ed67812
Posts: 163 Forumite
The scenario that the family need help on.......
MIL and FIL are great people, who have had some tough times, but are terrible with money admin. They both have credit reports racked with defaults, missed payments etc without any great debt (they manage to not pay £35 catalogue accounts etc).
They own property A together but only FIL (no idea how or why) is the mortgage holder. Property A is worth about £275k with a mortgage balance of £215k.
Grandmother in law (GIL) owns property B with MIL (50% each and both on the deeds as MIL was put on years ago). Property B is worth about £800k. The house itself isn't great, but it has land. When you look from the road, the land around property B looks like a large L shape, so essentially there looks like there is a house missing on the street. There is no mortgage on property B.
Property C is now being built on the space next to property B. This will become GIL new house and the plan is then that property B and property C will be split into two seperate deeds. Estimates are that property B will then be worth about £300k and property C about £450k . (It is realised that this is a drop in value than before property C was built, but that is because access to the land at the rear which had planning permission for a small 5 house development is restricted now – but GIL did not want to move from the street where she has lived forever and she has earned that choice).
Property C will become GIL new home and she will be the sole deed holder when the new deed is created.
Property B will become MIL and FIL new home and they will both go on the deeds.
Property A will be sold.
The issue is that funds are running low to complete property C and do required work (re-wire etc) to property B, about £30-40k.
GIL cannot remortgage property B because of her age.
MIL cannot remortgage property B (she thinks) because of her credit history.
FIL cannot remortgage property A (he thinks) because of his credit history.
MIL has looked at bridging loans but the fees and interest rates seem massive (about £10k for a £35k loan over twelve months. Even if repaid after two months, the fees are several £1k's). Is this going to be the only option?
Is it worth speaking to a mortgage broker or some other financial person (who?). Given the situation and the amount of equity all three have between them, surely there is a decent solution out there? Or is a bridging loan all that can be done?
Thanks
MIL and FIL are great people, who have had some tough times, but are terrible with money admin. They both have credit reports racked with defaults, missed payments etc without any great debt (they manage to not pay £35 catalogue accounts etc).
They own property A together but only FIL (no idea how or why) is the mortgage holder. Property A is worth about £275k with a mortgage balance of £215k.
Grandmother in law (GIL) owns property B with MIL (50% each and both on the deeds as MIL was put on years ago). Property B is worth about £800k. The house itself isn't great, but it has land. When you look from the road, the land around property B looks like a large L shape, so essentially there looks like there is a house missing on the street. There is no mortgage on property B.
Property C is now being built on the space next to property B. This will become GIL new house and the plan is then that property B and property C will be split into two seperate deeds. Estimates are that property B will then be worth about £300k and property C about £450k . (It is realised that this is a drop in value than before property C was built, but that is because access to the land at the rear which had planning permission for a small 5 house development is restricted now – but GIL did not want to move from the street where she has lived forever and she has earned that choice).
Property C will become GIL new home and she will be the sole deed holder when the new deed is created.
Property B will become MIL and FIL new home and they will both go on the deeds.
Property A will be sold.
The issue is that funds are running low to complete property C and do required work (re-wire etc) to property B, about £30-40k.
GIL cannot remortgage property B because of her age.
MIL cannot remortgage property B (she thinks) because of her credit history.
FIL cannot remortgage property A (he thinks) because of his credit history.
MIL has looked at bridging loans but the fees and interest rates seem massive (about £10k for a £35k loan over twelve months. Even if repaid after two months, the fees are several £1k's). Is this going to be the only option?
Is it worth speaking to a mortgage broker or some other financial person (who?). Given the situation and the amount of equity all three have between them, surely there is a decent solution out there? Or is a bridging loan all that can be done?
Thanks
0
Comments
-
"Is it worth speaking to a mortgage broker...?"
Without meaning to insult you, the answer to that question seems pretty obvious to me. I would be straight on to an experienced, independent, whole of market broker for this.0 -
Easy without a broker.
- MiL and FiL sell A and move into rented, freeing equity of £60k [GiL to contribute to rent as quid pro pro for use of capital ???]
- GiL's new house C completed, all deeds changed, GiL moves into C [GiL stops contributing to MiL and FiL's rent ???]
- MiL and FiL do the necessary work on B
- MiL and FiL move into B
0 -
Yeah, we did talk about renting but in all honesty, the amount of upheaval in that might make the bridging loan a better option if we can find one without the huge costs at the one that has been quoted.0
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Sell house A.
That's the only real security for the bridging loan. Though possibly not enough to secure a £30k plus debt.0 -
If you set the mortgage payments for property A against the rent for the temporary property, the net cost of that option may be very low ... even if you load the cost with a sum for the inconvenience, it may be hard to beat it with a bridging loan. I suggest you cost that option as a benchmark for any other option.Yeah, we did talk about renting but in all honesty, the amount of upheaval in that might make the bridging loan a better option if we can find one without the huge costs at the one that has been quoted.0 -
Sell A
if B is too small for all of them
IT's still summer buy a caravan/garden room if they don't want rented sounds like there is enough land for it.
do other houses not come up in the street,
could have kept B Sold of the plot/access
cash in the bank to buy another place when it came up
sell A do up.B0
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