Help and advice needed

john1002

Ok so Ill try and keep it brief and to the point and hopefully people will be able to help to my specific questions, Ive done searches on here and whilst they have helped they don't really answer some of the questions Im trying to get answers too.

So here goes............

My fiancee some 6 years ago split with her ex and as a result needed to keep the house and pay him off, as a result the broker she had used numerous times suggested a BTL mortgage and convinced her this was the only way and it was fine. Fast forward 6 years and she got a letter to say they are aware that she is living in the house and that she has a few options but as they don't do residential she can

a) carry on but won't be able to change anything on the mortgage.
b) ensure she has a way to pay the mortgage off at the end of the term.
c) remortgage and pay the loan off.

She rang them up and the lady said exactly the same and put her mind at rest, as did I.

But as the days have gone on she is practically scared stiff she is going to prison after googling it.

So my question is two fold, one is it possible to remortgage in this exact situation that its BTL but she is living there and has been for some time. I don't know what companies ask, is it just who is the mortgage with, account details and we will pay it off or would they see that its a BTL moving to residential and see it as a problem.

two how bad is it really not that I'm likely to tell her

three we know that she may have to sell the house if she can't re-mortgage but am hoping a lifeline is out there that i have just not read or found

The current provider does not do residential hence she can't swap it

Oh and finally to be able to tell her she is not going to jail, sort of goes back to two this one.

Thanks for any help or pointers

John

Lilla_D

She can remortgage, no problem, but best to speak to a broker about the options and perhaps not to the same one who recommended the BTL option 6 years ago... Yes, technically it was (is) mortgage fraud, so I'd recommend remortgaging to a resi deal as soon as possible.

On the other hand, if she still has correspondence / documents from 6 years ago to show what advice she received then, she could possibly make a complaint to the advisor firm, but being ignorant of the rules doesn't let her off the hook per se. However, unlikely that she'll go to jail.

Regarding the switch to a resi deal, it will depend on her age, income, outgoings, credit history, etc., so if her income is not enough (which might be why the advisor suggested the fraudulent application back then) to get the required mortgage amount, someone else (for example you) may need to get onto the mortgage to be able to borrow enough. Alternatively, yes, the property may need to be sold.

In short, no need to panic, but I'd recommend that she remortgages to a resi deal rather sooner than later.

john1002

Thanks for your detailed and quick response, broker it is and yes not the same one.

I can help with a cash injection making up any shortfall, I don't have enough to pay the whole mortgage off I'm afraid, not sure i would help to boost her mortgage application chances anyway as I am technically on a low wage self employed. Her LTV is only 45% so hoping that opens up more doors as well.

John

Lilla_D

You're welcome

Re your low self-employed income, sometimes a second applicant with a low income does wonders to potential borrowing compared to a single applicant on a modest income. Also, if you're a Ltd company director with low salary + dividends, but your company profit is higher than the dividends, then some lenders can use the salary + profit, which would make your income appear higher. If you're a sole trader and haven't done your 16/17 tax return yet, it may also be an idea to declare less expenses to boost your taxable profit, as some lenders can use the latest year profit instead of averaging the figures. I deal with self-employed people all the time and I see "technically low wage" vs what some lenders can use for assessment, so the situation is often better than what people assume, especially when someone is a contractor via their Ltd company

getmore4less

john1002 wrote: »

Fast forward 6 years and she got a letter to say they are aware that she is living in the house and that she has a few options but as they don't do residential she can

a) carry on but won't be able to change anything on the mortgage.
b) ensure she has a way to pay the mortgage off at the end of the term.
c) remortgage and pay the loan off.

She rang them up and the lady said exactly the same and put her mind at rest, as did I.

But as the days have gone on she is practically scared stiff she is going to prison after googling it.

a, they have said they don't care for now, that worry is over no real rush.

b, that means it was probably interest only and this was the only way to afford the payment at the time.
(was there a plan to pay it off?)

c. fairly obvious option but it will be repayment so is that affordable.


to start planing

first thing to establish

what is the current deal.
Amount owing
rate
payment
full term

then
any costs for overpayments
any costs in redeeming the mortgage in full

then
LTV(45% that will get to the best rates of the lenders)
what's the max payment she can afford.
any savings that can be used.
income will give a tough idea what lender will give her
age to give an idea of max full term.(longer term lower payment)

With that info it should be fairly obvious if this is a
keep the current deal and overpay.
Easy to find a better deal(and affordable)
not so easy really does need a broker.
needs help with more money/income to make a change happen.


It would be silly to give up the current deal if it has a great rate and no charges for over payments and they are possible/affordable.

chances are it's not and a change would be best option anyway.

john1002

Getmore4less,

Thank you for your response, to answer your question yes she always had a plan to remortgage but was waiting on me to decide to move in and then was going to change, she is on BM standard rate now.

She has no savings but I do but not enough to pay off, house worth £225000 minimum for area and owed 123000, 45% was rough guess but still below 55 as house could go 240000 based on others sold.

Remortgage looks the best case but with no major rush as yet so can ensure best deal.

Thanks

John

getmore4less

£123k would only need an income c.£30k is that a problem or are there other debts in the background

john1002

No she is self employed and on sa302 profit is only 19500, no debts as I'm paying them off, they were circa £23,000.

Her income is 55,000 but puts everything through to keep tax down which of course now hinders her income for mortgage.

John

getmore4less

With £55k overpayment of her own debt and mortgage should not have been a problem then.