tax bill and borrowing

brixtonpremise

Good evening everyone,

I am just looking for a bit of help regarding my situation, I am due to speak to a mortgage broker in the coming weeks, however any advice prior to then would be much appreciated.

I currently have a mortgage on my main residence of £1,250,000, with a house value of roughly around £1,800,000. The mortgage is currently on an Interest only basis, which is fixed at 2.39% until 30/09/2018.

To cut a long story short, I have a bill of around £300,000, payable by January 2018, from HMRC, and I do not have the cash reserves available, or enough surplus to save that amount through my income, between now and then to afford it, therefore I am requiring to raise funds against my property.

The obvious solution would be to sell my property, however between 01/10/2017 and the end of the fixed rate, the early repayment charge is 2% of the balance (£25,000), and I don't know if there is much appretite for my property at this time.

However, I also understand that with my current lender, the maximum LTV with an interest only mortgage is 75%, which given my existing interest only element, would not permit me a sufficient amount to release.

My question is, is it possible to switch my remaining part to Capital and Interest, whilst within the fixed term, without incurring an early repayment charge?

Thank you in advance,

BLOW_FLY

I see you've had quite a few views of your post but no replies, I was going to wait till someone more experienced or informed replied.

Perhaps, like me, people look at the figures you're touting round and thought that's so far away from the 'norm' that where on earth do you start......?

I think the only realistic way out of this is to probably sell your (I assume) London property. You say it's 'worth' £1.8m but it's only worth what someone will pay. Put it on the market at £1.6m (or considerably less than similar properties) and fish for a buyer looking for a 'bargain'.

Just rough maths, but £1.6m would clear the £1.25m IO loan along with the ERC and get the HMRC monkey off your back.

Used the rest to live within your means for a few years and feel liberated.

Yeah you're gonna take a hit on the ERC but don't wait for HMRC to come looking for their money come next January....

BF

Brock_and_Roll

The reality here is that the OP is very close to being insolvent - i.e. not being able to pay the next bill as it falls due.


Net assets are very close to zero in a forced sale situation - given that the London property market is slowing at the moment in the middle/upper end, if it were me I would try to liquidate my position now to pay the bill whilst the matter is still in my hands.


If things are allowed to drag, then the OP might lose control and end up bankrupt in a forced sale situation.

BLOW_FLY

Brock_and_Roll wrote: »

The reality here is that the OP is very close to being insolvent - i.e. not being able to pay the next bill as it falls due.


Net assets are very close to zero in a forced sale situation - given that the London property market is slowing at the moment in the middle/upper end, if it were me I would try to liquidate my position now to pay the bill whilst the matter is still in my hands.


If things are allowed to drag, then the OP might lose control and end up bankrupt in a forced sale situation.

Succinctly put, I was alluding to the same thing.

Because of the sums involved and the involvement of HMRC, sale of the property is essential and inevitable, the OP isn't far off losing control as it's stands.

An outstanding Tax bill of £300k and HMRC chasing, remortgage is probably nigh on impossible and the lender will likely make a margin call.

I get the impression that the OP is trying to 'save face' in some way (for whatever reason) but in reality as you say needs to try and liquidate their position now. Which is easier said than done with a very illiquid asset.....

BF

David_White

It wouldn't be out of the question getting finance however you will need an experienced broker and I would brace yourself for a potentially expensive solution.