Complicated!

Sarahspangles

These are the workings out

Parents buy your 30% of the £700k house for £210k (not £175k)
Clear the £40k secured loan - it’s secured on your share of the house
Clear the £170k mortgage
You have £0 from the shared house

You buy a £280k house
You would need to aim to have a £28k deposit
Plus solicitors fees, stamp duty if applicable

If your parents only pay £175k then you need to find a deposit plus £35k as you only have £5k over to pay off the secured loan = £63k savings plus fees etc.

 

llcooljayne1

Thankyou for giving me a breakdown. As an example, if they gave us £28k as a deposit, we could then potentially if accepted remortgage and hopefully move the secured loan with us? 

CSI_Yorkshire

I think you should stop trying to think about moving the secured loan - it's not very likely and is messing up your thinking.

Pay off the secured loan in this process.

Sarahspangles

I think the NatWest will stand in your way if you want to secure a £40k loan against a new house they are also securing a mortgage on.

Now, you have £210k (mortgage plus loan) secured on a house worth between £582k and £700k.  That’s a Loan To Value (LTV) of between 36% and 30%. If you defaulted and either the loan provider or the NatWest moved to repossess the house they could sell at quite a loss and still recover their loan and legal costs.

Remember that NatWest and their legal people, and the Loan Provider and theirs, all get paid in full before you and your parents get anything.

If you bought a new house it’s unlikely that NatWest will allow you any further borrowing, and they do have to agree. Firstly because it makes it more complicated for them to repossess with another ‘charge’ as well as the mortgage, and secondly because you aren’t offering very much in the way of deposit, so if the house was repossessed they might not get back their mortgage and legal costs. The Loan Provider would probably see it the same way.

You also need to look at the interest rate on a Secured Loan - it’s likely to be more than a mortgage and even if NatWest allowed it that would be taken into account in an affordability calculation.

Remember that if you are able to put down a 10% deposit on a £280k house you would need a £252k mortgage. The NatWest are going to see a credit history where with a £170k mortgage you still needed a £40k secured loan which may ring alarm bells.

Simonon77

Natwest may let you port the mortgage, but I think there is no chance of them letting you borrow more to clear the loan as well given your income and only having a 10% deposit. 

Also the loan company may not let you transfer it to a cheaper house anyway as you will only have £28K equity in it, which won't cover the amount of the loan.

I really think your best option is to scrimp and save to pay off the secured loan as quickly as you can, and then look at the situation again in a couple of years. You have a decent joint income so you should be able to get it cleared fairly quickly.

This would put you in a much better situation to port the mortgage to a new house

kingstreet

Porting doesn't mean transferring a mortgage from one property to another. That is not possible.

Porting means transferring the terms such as the interest rate to a new mortgage on a new property with the same lender if you qualify for that mortgage.

Please clarify how you have a mortgage on a property jointly owned by others not party to the mortgage.

llcooljayne1

That all makes perfect sense. Think it’s time to start saving before we consider moving! 

They are on the deeds of the house so it’s on the land registry that they own part of it 

RAS

auntloo said:

That all makes perfect sense. Think it’s time to start saving before we consider moving! 

They are on the deeds of the house so it’s on the land registry that they own part of it 

There are different ways of owning property jointly.

Regardless of how you as a family perceive the ownership to be arranged, what matters in law is what it says on the paperwork. That will mean getting a copy of the deeds if you do not have them (£3 from the Land Registry), and finding out if it is a joint tenancy or tenants in common. If it's tenants in common there should also be a deed of trust saying how you want the ownership divided up between you.

If this sounds like teaching grandma to suck eggs, if I'd a tenner for very instance I've encountered a thread on here where the legal documentation doesn't match what the party or parties thought had been agreed, I'd have a tidy nest egg. It's not uncommon for people to leave property in will which is a joint tenancy and very common for people to think they've agreed a percentage only for the now-ex to demand 50%.

With 4 of you, matters are more complex.

_Penny_Dreadful

I’m really curious as to how you have a property that is seemingly owned jointly with your parents yet your parents don’t appear to be party to the mortgage or the secured loan. 

warby68

So £175k was 30% of the purchase price, therefore you had no equity on purchase.

How does the £40k secured loan fit in? As it stands it 'uses up' the increased value of your share of the property so you still have no equity.

However if the £40k was for improvements to the property for example then perhaps a 'fair' view would see your parents responsible for £28k of that £40k. So if they paid you that on top of your 30% share you would have a £28k deposit with your current mortgage and secured loan fully repaid. Parents need to find £238k in total.

Obviously we know nothing of the arrangements between you and parents and it also looks like you haven't made any repayments to your mortgage or secured loan as they are still exactly 30%. Perhaps you have and there is a little equity there too?

If you've never put any cash or savings towards the property purchase and still don't have much behind you that is probably where you need to start especially if the £40k secured loan is all your responsibility as you are very unlikely to be able to refinance that on a house with a much lower value and much higher LTV just from the mortgage.