End of interest free only term - can you remortgage? No judgement please

Chrysanthemum5

Hi All

My husband and his dad (when my husband was 24 and didn't have a clue about mortgages) purchased a house on a buy to let interest only mortgage. It was right in the worst possible time.

Anyway there are lots of reasons the capital is not now here at the end of the mortgage term (mainly the house lost value and the rental was only covering the mortgage etc) so please no 'you should have saved or should have acted sooner' responses as this is not helpful right now.

Anyway the end of the term is two months away. My husband and I earn enough and have decent enough credit scores to take over the house on a remortgage option as we would actually like to move there. Is this possible to get a remortgage to a repayment one at the end of the term? In ten years since having it every payment made no missed ones ever etc.

Again I am having sleepless nights as it is so no kicks in the guts please. Thanks x

dimbo61

An Interest only mortgage on a BTL property is normal.
You can only offset the Interest Only payment against your profit from renting the property if you make any !
Now the property may have Increased or Decreased in value over the time your husband and his dad have owned it but that depends on location, condition, type of property.

If you want to buy the property off your husbands father go speak to a mortgage broker.

betmunch

Standard plan for a BTL would be to sell at the end of the mortgage term.

If you would rather keep it and live there, just speak to a broker about remortgaging and transferring your father in laws equity to you.

No reason to lose sleep over it

Chrysanthemum5

There is no equity just the deposit they put down 12k it was gifted to us my father in law doesn't want it and so the amount they loaned 125 is still the amount owed as the house has not lost or added any value so is it possible to just get a broker and remortgage at the end of the term? X

uncreative

To enable you to stop worrying about it, think of it as simply a transaction. The bank is looking to be repaid by your husband and father in a couple of months time. This can be achieved by:

1) Pay by cash
2) Sell the property
3) Refinance it

In that 1) is not an option for you, then start investigating the others. A standard mortgage is obtainable in 2 months, so you should start looking into the possibility of sale, whether to you or a third party. If you and your husband buy it then it may be considered a linked transaction, your husband and his father have been in partnership and would sell it to you and your husband so this will need to be taken into account.

The biggest £number you have to deal with is any difference between the mortgage principal and the amount that it gets currently valued at, as the current valuation is simply where you are at with it.

This is not a straightforward situation so I would make it a priority to get professional advice from a broker/IFA on Monday.

betmunch

What's it worth now.

If you don't have to give the father in law any money back that will help towards the equity

Chrysanthemum5

Sorry to be thick what's the mortgage principal vs where we are at now.

I'm not savvy with these things I am a PA to priests lol.

They put down 12k on a 137 house and the house is still worth 137. Not gained or lost anything

Thank you

They have three months to sort it actually not two x

Thanks for all being kind I have never panicked so much I have a two year old and future seems bleak if they take to off us and repossess as we can more than afford a repayment mortgage on it. The mortgage is currently 525 but we could pay 800-900 a month on a property so can afford it.

downhillfast

Chrysanthemum5 wrote: »

Sorry to be thick what's the mortgage principal vs where we are at now.

I'm not savvy with these things I am a PA to priests lol.

They put down 12k on a 137 house and the house is still worth 137. Not gained or lost anything

Thank you

They have three months to sort it actually not two x

Thanks for all being kind I have never panicked so much I have a two year old and future seems bleak if they take to off us and repossess as we can more than afford a repayment mortgage on it. The mortgage is currently 525 but we could pay 800-900 a month on a property so can afford it.

By mortgage principal I think they mean the outstanding amount owed - ie £125k... you say it is valued at £137k so the difference is the £12k deposit that was put down initially which as you said before is the equity effectively.

What this means is that you still have the 12k to put down as a deposit against a new mortgage which a decent broker will be able to sort for you and guide you through the specifics of your situation.

Edi81

So they have £12k of equity.
Does you have any savings that he can put in? This could allow you to get a 90% repayment mortgage.
You sound like you need a broker.

amnblog

Bit baffled why you are not getting advice from a broker instead of worrying yourself sick.

Are we saying the property is owned by your father in law and husband valued at £137,000, mortgage £125,00.

Are you all living there now?

There are a number of factors that need to fit and some potential complications, getting one to one advice is the way forward.

Chrysanthemum5

Hi only me and husband and two year old are here now.

I'm worrying myself sick because I know nothing about mortgages and the prospect of them not letting us remortgage and is leaving and starting again is very worrying.

We have 3k in savings to add to the 12k.

We are seeing a broker this week but wanted to see if the remortgage thing was even possible. Please forgive my ignorance I'm a 32 year old mum of a Two year old who was a youth worker and is now a PA I am awful with these things so if you don't understand or realise any options available it's very very scary.

Husband knows as little as me and he is an English teacher but still doesn't get it all (was really sheltered and his dad more or less sorted all this mortgage the first time round and I wasn't around then).