No more finance, Mortgager wants 50k

htrj

My mother has just run into something of a stumbling block.

Her interest only mortgage comes to an end soon. She was going to sell an asset in order to repay the mortgage but a bureaucratic problem has rendered that asset worthless. Between the two of us we have managed to beg, borrow and, errr, no it hasnt got that bad yet, about 75% of the mortgage balance but there is no opportunity to borrow the rest. No one will give her another mortgage at her age and she can't get anymore credit.

Between the two of us we could get the remaining balance together, in cash, within about 18 months.The mortgager is not currently entertaining the notion of an extention of the repayment period. Instead they want her to apply for another mortgage which, having spoken to various IFA's we don't think she will be eligible for. Despite having a fairly high income from letting rooms to lodgers the lenders won't acknowledge that income and don't seem to like lending on what they might consider to be an HMO. Despite having lodgers it is her home.

What is the mortgager likely to do when this mortgage comes to an end and she has not found any more credit?

glosoli

Perhaps equity release might be an option?

What was the issue with her original repayment strategy?

htrj

Thanks for the suggestion but I am far more interested in what the mortgagers strategy is likely to be at the end of the term before equity release is considered.

She intended the asset, some land, to be the repayment vehicle although I think the lender was told the entire property would be sold at the time the mortgage was taken out. There is now a planning issue with the land, which may be resolved, but currently it is all but worthless.

getmore4less

some real numbers may help those in the know on lender policies

outstanding amount
how much is needed
income
values etc.

csgohan4

repossession is one strategy, it seems your mother has already exhausted the mediation with trying to ask for more time with the bank and indeed the bank is not obliged to give more time,


As your mother signed into a contract to pay up on x date and if not the bank is within their rights to repo the home.


Unfortunately the land which was going to be used didn't work out, but that is not the banks fault

htrj

Repo is a consideration. Is there any mitigation in that event, if she can prove she is good for the money within 18 months for instance?

Real numbers:-

Her income:
30k pa from lodgers,
15k pa from pension,

Mortgage balance £50k
Monthly mortgage repayment £300 pcm.
Outstanding loan repayments £900 pcm.
Credit card debt repayment £300 pcm.
Living expenses £400 pcm.

My income 30k pa.
My outgoings £750 pcm.

The property is worth about £1m.

ACG

Is the £50k remaining after you have cleared 75% of it or before?
If you were to clear £37k (75% of £50k) and carried on paying £300 a month, with a "promise" to clear the difference in 18 months, I would be a little surprised if they did not accept that a a repayment strategy.

htrj

No,

50k is the balance after clearing 75%(150k).

getmore4less

Are the lodgers long term?

Would they be able to raise funds for a discount on rent.

Is that lodger income after house running costs and tax.

400 looks low to live of if it includes a things like council tax and a car.

Thrugelmir

htrj wrote: »

Thanks for the suggestion but I am far more interested in what the mortgagers strategy is likely to be at the end of the term before equity release is considered.

In the absence of full payment. Repossession. Contractual terms agreed at the outset will be enforced. Choosing this route will incur your mother a large amount of additional cost.

Is the letting income declared to the HMRC?


How much other debt does your mother owe in total?

anniecave

What is outstanding balance on the loan? Is this secured on the house? Is this your mother's loan (not yours?)


What is outstanding balance on credit card? Is this your mother's?


Do you live in this property also? Or elsewhere?