Problem with remortgaging need advice

Loops82

Hi there, I’ve just come across this forum and I’m hoping someone might be able to offer some help or advice. It’s a bit of a curve ball type of situation in terms of the mortgage, so bear with me, here goes .... my father in law bought his parents house over 20yrs ago when they became elderly, they lived there until they passed away. The mortgage has now run its course and a new mortgage is needed ASAP. My father in law is now in his early 70s with no income. The house in question is now worth approx £1m, and the mortgage needed is for £400k. The property has been recently refurbished with the intention to let it out (it was valued by a local agent who said it would be between £2.5k to £3k pcm) the problem is trying to find a lender who will offer a mortgage. Has anyone come across this type of scenario or knows of any good lenders who might offer a mortgage for this type of situation?
Any advice or guidance would be fantastic, thank you in advance.

BoGoF

Surely if the mortgage had 'run it's course' it would be paid by now? Was it interest only?

TBH I think the only solution is to sell. Why the need to let?

Loops82

Hi, yes it was interest only which is why it hasn’t been paid off. He really doesn’t want to sell it and wants to keep it in the family, it’s an amazing place and I don’t think you would find anything similar again. It probably would make more sense to sell but he really is keen to keep it if he can.

Bimbly

He will need a buy to let mortgage.

enthusiasticsaver

Interest only mortgages are difficult to find and most lenders won't lend past the age of 70. Has he approached his current lender as they may agree to an extension. How does he think the mortgage will be repaid and how has he been servicing a £400k mortgage with no income?

Loops82

Hi the mortgage was financed by another member of the family who lived there too and was able to pay the mortgage. There is an extension on the mortgage from the lender at the moment and they won’t agree to lending again. I think a bit to let mortgage would be best, but even that is proving by a problem as most lenders insist on 6 months rental income already, it’s a bit of a catch 22 situation.

Bimbly

Loops82 wrote: »

I think a bit to let mortgage would be best, but even that is proving by a problem as most lenders insist on 6 months rental income already.

Start the ball rolling. Go to a lettng agent to start looking for a tenant. You will get informtion on how easy it will be to let and maybe get a tenant to satisfy the mortgage company.

Go to a broker specialising in buy to let and get them to hunt out a mortgage. Maybe they will find a lender who doesn't need the six months history. Hopefully the two will come together.

If he is not living there, then he can't get a residential mortgage (or equity release). So it's BTL or sell.

getmore4less

Where is he going to live.

Keep it in the family, why don't those that will be inheriting move in take over the mortgage and free up the FIL from this burden to get on with life.

my father in law bought his parents house over 20yrs ago when they became elderly, they lived there until they passed away.

did the FIL move in when he bought it, did he pay full price at the time.

This has implication going forward.

given the mortgage situation it is possible the IHT planning may have been overlooked.

getmore4less

£2.5k-£3k rent on a £1m house

Gross yield 3%-3.6% that's not very good.

Once the costs and tax are factored this could be just washing it's face.

AnotherJoe

If he's not going to live in it, and a tenant is, what will happen when he dies? Presumably it will be sold and the proceeds go to various relatives? So thats not "keeping it in the family".

Or if there's someone that would like to live in it, you perhaps, well then why not buy it now from him?

But if there's no one that wishes to buy it and live in it, then whats the point of "keeping it in the family" by letting it for a few years before selling it ?

Loops82

Thanks for your feedback all. Yes, the plan is for it to be lived in by family in the future. Maybe another option would be to get other family members (he has five sons) to look at buying it from him? Does anyone have any thought on this option? Is there inheritance or tax implications?