Equity Release Question

too_much_debt

Hi

Hoping someone might be able to advise.

A relative's mortgage was due to be paid off at the end of December (75 years old), it was an interest only mortgage, no money to pay it off. Relative is looking at Equity Release but has been told by equity release company the valuation has to be on the whole house, but the basement is a separate flat to the upstairs. I think the mortgage was acquired before the property was split into two dwellings. The property has two council taxes. Will the equity release company lend on this basis, the relative does not live in the house they live in another property.

Just wondering the likelihood of getting equity release.

Also bank has changed mortgage to Repayment which is £2,000 a month and the relative can't afford this so as they have been chased by bank and not answered letters how long before the bank will repossess property if the new payments are missed.

Thanks in advance. Confusing I know.

Thrugelmir

Was the property purchased as a BTL?

I think the mortgage was acquired before the property was split into two dwellings.

If the property is mortgaged that's unlikely. What does your relative actually own. Separate council tax ratings doesn't indicate anything.

The mortgage was due for repayment on the 31st December. Doing nothing will cost money. Better that contact is made with the lender as soon as possible.

too_much_debt

Thanks for replying!

Surely the two council taxes show it is not one property, search the land registry and it comes up as two separate properties.

Equity release company said they would only lend on the whole house not part of it so I'm assuming they have checked the mortgage and it's on the whole house.

Thanks!

Thrugelmir

too_much_debt wrote: »

Surely the two council taxes show it is not one property, search the land registry and it comes up as two separate properties.

Equity release company said they would only lend on the whole house not part of it so I'm assuming they have checked the mortgage and it's on the whole house.

Council tax liability does not indicate ownership.

The mortgage charge will be placed against one property (or in this case part of a property).

If you've searched Land Registry, have you determined if your relative owns the basement flat outright, i.e. acquired this part for cash or a mortgage that has been paid off. Or whether this part of the property is mortgaged with another lender.

too_much_debt

The house was owned outright but money was raised with a mortgage probably about 15 years ago not sure exactly. At present relative is paying two council taxes as another relative lives in the basement. At one point the basement was up for sale and an offer accepted when I assume it was registered as two flats because it was one house then, then relative backed out and one of the adult children moved in there.

The equity release company are sending a surveyor in the next week or so we just wondered how likely they are to agree to equity release as they specified they would only do equity release on the house as a whole not just one flat.

Thanks for your replies we will just have to wait until the surveyor goes round and see what the decision is.

RADDERS

too_much_debt wrote: »

Hi

Hoping someone might be able to advise.

A relative's mortgage was due to be paid off at the end of December (75 years old), it was an interest only mortgage, no money to pay it off. Relative is looking at Equity Release but has been told by equity release company the valuation has to be on the whole house, but the basement is a separate flat to the upstairs. I think the mortgage was acquired before the property was split into two dwellings. The property has two council taxes. Will the equity release company lend on this basis, the relative does not live in the house they live in another property.

Just wondering the likelihood of getting equity release.

Also bank has changed mortgage to Repayment which is £2,000 a month and the relative can't afford this so as they have been chased by bank and not answered letters how long before the bank will repossess property if the new payments are missed.

Thanks in advance. Confusing I know.

You say that the bank has changed the mortgage to repayment, as far as I am aware this is a change to the mortgage contract and cannot be done without the consent of both the borrower and the mortgage provider. I would be double checking on that as it may give you a little more breathing space. HTH

-taff

If the interest only mortgage ended in december, with no contact from the owner, would that then not have just gone on to a SVR mortgage? Hence the repayment...

Thrugelmir

RADDERS wrote: »

You say that the bank has changed the mortgage to repayment, as far as I am aware this is a change to the mortgage contract and cannot be done without the consent of both the borrower and the mortgage provider.

If the mortgage term has expired then the borrower is now in breach of contract, i.e. default. As the responsibility lies on the borrower to discharge the debt on the due date. The lender being afforded the rights under the contract as remedy.

RADDERS

Thrugelmir wrote: »

If the mortgage term has expired then the borrower is now in breach of contract, i.e. default. As the responsibility lies on the borrower to discharge the debt on the due date. The lender being afforded the rights under the contract as remedy.

To call the debt in, yes but surely not to change the payment conditions?