need to help my sister keep house!

essexsi_2

Hi need some advice please.

situation is my sister brought a house with partner 2 years ago due to pregnancy. Now has a little boy and ofcourse the partner left. Through much legal wrangling she has secured sole ownership of the house when the fixed rate ends on 31st january 2008. She is now looking to remortgage with only her on the mortgage.

she is part time teacher earning half wage approx £12,000 per year but is looking to go back full time september 2008.
House was bought for £185,000 and is now valued at £235,000.
Mortgage is for £165,000 with deposit of £13,500 from keyworker scheme.

The family situation is-
mum and dad are retired and own their house outright
I am a fireman and have a mortgage
My brother is a trader and has a basic plus bonus, and a mortgage.

How can we help my sister, can we all act as guarantors for example ? Best options?

Many thanks for any advice given.Si

poppy10_2

essexsi wrote: »

How can we help my sister

Advise her to sell and run all the way to the bank with the £70k equity. She will be able to rent somewhere for cheaper than the mortgage payments, and will be able to live very comfortably with all that money in the bank.

Alternatively, she could remortgage, struggle to pay the cripplingly high mortgage repayments each month, and see the value of her house plumment month after month as the market slows down. In addition, you and your parents can 'help out' by taking on more debt - withdrawing equity from your houses and therefore increasing the sizes of your mortgages. That way all of you struggle and suffer,rather than just one of you.
Your choice. :money:

Badger_Lady

I rarely recommend sell-to-rent, but it sounds like this is just going to be too expensive for your sister. Poppy's right - there could be a nice bit of equity there to ensure her new family's security, and she can then consider buying an affordable property on her own once she's got settled and sorted.

Is there any reason for her to particularly want to stay where she is?

dunstonh

I concur with everything said.

She doesnt have the income to support that size of mortgage and will be heading towards debt if she stays.

Jet

Am I right in thinking if she gives up work, claims income support, child tax credit she would be entitled to mortgage interest payments paid by the government?

If her income is 12k at present and soon to be 24k, what tax credits will she receive (these are counted as income by some lenders)? Also what maintenance is she receiving for the child? All this added up might make it workable.

Could she spread the mortgage over a longer term or go interest only for a while?

I have to say though, just looking at it quickly, I think she would be better selling up and not having the worry and stress.

Emmzi

Jet,

re: interest being paid - only in *some* cases, and only after around 9 months AIR.

Dan_Collins_2

Can we remember to not recommend stuff but give opinions and ideas!

This is a big deal to this young lady and her family, I think they need to think carefully.

You have a few options. You could all chip in with the mortgage and have a claim on some equity. In the long run your Sister will miss out on some equity but will remain in the home. You will need to seek legal advice and get a few opinions.

You dont want to start raising money on your folks house as they are retired.

Who is the lender? You should start with them. They can offer a product without underwriting the case to keep the payments low. Remembering if you choose to sell dont tie in. Also the market is slow and it could take a while to sell.

Why do you want to keep the house? If your not fussed about the house then you could sell and use the equity. Although 70k Is not a lot these days and will run out.

I would sit and think about what you would all get out of keeping the house and more importantly how it will effect the young family. Moving is unsettling but being repo'd would be worse!

I can see a big family meeting coming on!

Qual123

she will find it very hard on here own to find a mortgage, im sure it can be done with family help, could she rent out a room?

Dan_Collins_2

She may not need one, if she is with a good lender she will be offered a good rate. Its if she wants or can keep the mortgage going that is the issue!

seven-day-weekend

She can charge up to (I think) £85 per week if she has a lodger and will not have to pay any tax. Maybe another teacher from her school?

http://www.landlordzone.co.uk/lodgers_rent-a-room.htm

This may impact however on any benefits she may be entitled to.

PasturesNew

Half the "facts" are missing though.
She's clearly getting Working Tax Credit et al - as she can currently pay the existing mortgage.

Also, we've no idea of the size of the house.

Not enough detail for informed answers. Just shots in the dark

As for drawing £70k equity, is the house really "worth" £235k today? Or is that a guess? Or what one sold for last year plus a few bob? Not enough information.