Desperate Mortgage Advice Needed

Pixie5740

Then you'll find out if it's possible when you meet up with the mortgage broker.

I would caution you about turning unsecured debt into secured debt though.

I'm not really convinced that all parties understand all the potential consequences to them though, especially your mum. Are your parents married?

Haydn_26

Yes they're married but as far as I know my dads name on the deeds if that means anything? They aren't divorcing, they're mutually separating at this stage. We were concerned that because my mum is in her 50s and unemployed she wouldn't be able to mortgage herself with no income. She would have to rent private and find a job whilst ploughing through her share. Not impossible to find work but less likely. This way we are hoping she wouldn't have to move and she's have relative security at least and the family home remains in the family.

19lottie82

OP. With the greatest respect this whole situation sounds like a total mess. Even if it is possible (and I'm not convinced) do your future self a huge favour and don't do it!

As someone has already asked. What would you do if you were to get a future girlfriend pregnant, who refused to live with your parents, but all your money is tied up in their house?

A) sell your partners home so you can buy a new house with your partner and child, effectively making your parents homeless and therefore ruining your relationship with them forever?

Or

stay living in your prints house without your (ex) partner and becoming a part time dad?

The above is theoretical of course, but entirely possible. As are various other extremely messy situations.

However, it does seem from your posts that you have made up your mind to try and go ahead with this potentially disastrous plan, based on your fathers encouragement, despite the advice from many posters on here?

Irratus_Rusticus

Hi again, either others are missing the point or I am?

Surely mum's share is being protected? Either house has existing mortgage to redeem or it doesn't.

Parents have notionally divided the value in three. OP gets gift of equity for one third.

If an existing mortgage needs redeeming:-

OP buys out parents, dad walks away with his share to live elsewhere, mum's share is effectively in the value of the mortgage being redeemed - hence the "need to have an indemnity set up via their own solicitor even when the money is advanced against a formal loan agreement or a second charge is put in place to secure the family member’s rights".

OP's mortgage provider has first charge for OP's loan and mum has second charge protecting her share?

If no existing mortgage being redeemed, mum is getting her share of the buy-out to save and live rent free. Assuming this isn't the case as otherwise OP would only need a smaller buyout to free dad alone - and mum's interest would remain in an indemnity or charge.

Not saying any of this is possible, mind, but OP is being told it is.

As for the future. OP will have equity share of a familiar house presumably where wanted, and if perfect partner turns up, it is mum who will face an unplanned upheaval if she can't buy OP out and OP needs to move on. Rather this manageable risk than all three going separate ways now with insufficient to own a property each?

Loving this idea. Shame more amicably splitting parents don't try to make it work.

Pixie5740

Irratus_Rusticus wrote: »

Hi again, either others are missing the point or I am?

Surely mum's share is being protected? Either house has existing mortgage to redeem or it doesn't.

Parents have notionally divided the value in three. OP gets gift of equity for one third.

If an existing mortgage needs redeeming:-

OP buys out parents, dad walks away with his share to live elsewhere, mum's share is effectively in the value of the mortgage being redeemed - hence the "need to have an indemnity set up via their own solicitor even when the money is advanced against a formal loan agreement or a second charge is put in place to secure the family member’s rights".

OP's mortgage provider has first charge for OP's loan and mum has second charge protecting her share?

If no existing mortgage being redeemed, mum is getting her share of the buy-out to save and live rent free. Assuming this isn't the case as otherwise OP would only need a smaller buyout to free dad alone - and mum's interest would remain in an indemnity or charge.

Not saying any of this is possible, mind, but OP is being told it is.

As for the future. OP will have equity share of a familiar house presumably where wanted, and if perfect partner turns up, it is mum who will face an unplanned upheaval if she can't buy OP out and OP needs to move on. Rather this manageable risk than all three going separate ways now with insufficient to own a property each?

Loving this idea. Shame more amicably splitting parents don't try to make it work.

Yes I think you are missing something. The OP is being gifted some of the equity to use as the deposit. The mortgage will be in the OP's name only. The OP will be the only one named on the deeds. The father walks away with some of the equity as cash in the bank whereas the mother receives no cash but also doesn't have any security for the roof over her head either. The mother isn't currently named on the deeds but that doesn't mean to say that she isn't entitled to anything because they are married. The mother really needs some legal advice to understand fully what she is doing/giving away.

Given the information the OP has provided I think mortgage affordability is tight at best so it may all become moot anyway.

RAS

Thanks Pixie.

Basically dad is stitching up mum so that he can leave with some equity and the OP is trying to "save the family home".

Mum urgently needs good legal advice on the divorce settlement. If the OP reads JackRS' lengthy thread, mum would probably get 2/3 of the equity and possibly several years spousal maintenance to tide her over until she finds work. There may be a pension share if there is one.

Haydn_26

Yea the mortgage to be paid off is £60k.

Irratus_Rusticus

Haydn_26 wrote: »

Yea the mortgage to be paid off is £60k.

Ah, makes more sense. That is why you need a two thirds mortgage for £100K. Dad is getting £40K to live elsewhere leaving your £50K equity share and your mum's share still in the house value with mum's interest being protected by a charge or indemnity. You owe her back her share if the house is sold, presumably with apportioned share of increased value too.

Wishing to avoid turning this discussion into a divorce argument about stitching people up, I've taken OP at word that mum and dad have volunteered and agreed to divide the house value in three. As a starting point and on face value this stitches nobody up unless mum does want more and chooses that route and pays lawyers their share out of the value of the house as most parting people decide is 'sensible' to do. Not a matter for me to second-guess that choice.

On the facts purely as stated nobody is 'winning' assuming there will be a charge protecting mum's share as mentioned above re NatWest option.

Good luck as said before.

swindiff

Dad seems to be doing very well out of this deal. The mortgage is £60k on a house valued at £150k. So there is £90k of equity in the property. So dads 50% share with mum would be worth around £45k, after solicitors and EA fees if the property were to be sold he would be lucky to walk away with much more than £40k anyway, so I am failing to see where the gift is here?

Irratus_Rusticus

We are stumbling into agreement.:)

Dad is getting £40K which is, as you say, his likely net share if the house was sold and parents split the proceeds.

Mum has her share protected by an indemnity or charge at the land registry per NatWest above (that's the important bit).

OP is gifted £50K in the value of the house.

There is a gift ... to the OP. But only on pain of OP taking out a mortgage to buy out dad and also redeem the existing mortgage to protect mum's share.

Oh joy if only it can work.