Jump to content
House Price Crash Forum
Yoss

Btl Sister Asks Me To Assist With New Mortgage Application

Recommended Posts

Had my sister over at the weekend for BBQ, late into the evening when my partner went to bed she got a bit tearful.

Turns out her mortgage is BTL Interest only 125K, even though she is living in the house.

She runs her own business and has 15 year old son. In 12 months her BTL mortgage resets to 7.5%, I asked why she doesn't just re-mortgage on a normal fix and admit to living there (Split with partner, so perfectly valid)

Reply was that after losing tax credits (Son not going into further education)/Paying rent on business property/Paying staff costs (only 2x) and paying back the Ex that lent her the 40K deposit she only clears £700 a month!

I offered to pay mortgage for 6 months if she really gets stuck, and put her up rent free if she lets it out...But no way in hell am I putting our family home on the line for that.... which is basically what was asked me to do!

Offered 8k(all my savings) to reduce principle but that will not be enough.

I suggested asking other family members....She already had... But turns out of my 7 siblings I am the only one that has provable income!

Share this post


Link to post
Share on other sites

Interesting post. Alot of families have had similar conversations in the past two years.

Sounds like money down a black hole. And I see the evil of child tax credits right there - considered as sustainable income by lenders and borrowers, when they can be withdrawn just when it matters.

At least she's paying back her ex-partner, so there's a sense of duty. But will it get so bad she declares bankruptcy and throws herself on the state for housing with a child who is still dependent?

Another way of thinking about it: Would you gamble the capital she's asked from you, intending to give her the profits? Errrrr ...

Share this post


Link to post
Share on other sites

But will it get so bad she declares bankruptcy and throws herself on the state for housing with a child who is still dependent?

That is probably her only way out.

I know a few people who have gone down this route. I could not figure out how they were affording 2 or 3 holidays per year over the past decade and then suddenly, bham, they tell you they have gone bankrupt... but it is not called bankrupt now... personal insolvency or something... and they stay in the house and life seems to go on pretty much as before.

Share this post


Link to post
Share on other sites

Interesting post. Alot of families have had similar conversations in the past two years.

Sounds like money down a black hole. And I see the evil of child tax credits right there - considered as sustainable income by lenders and borrowers, when they can be withdrawn just when it matters.

At least she's paying back her ex-partner, so there's a sense of duty. But will it get so bad she declares bankruptcy and throws herself on the state for housing with a child who is still dependent?

Another way of thinking about it: Would you gamble the capital she's asked from you, intending to give her the profits? Errrrr ...

Best offer I can make is rent free accommodation/food while she rents it out until back on her feet, or at least the 40K she owes is paid back... But given what she earns that might take a long time.

Share this post


Link to post
Share on other sites

Best offer I can make is rent free accommodation/food while she rents it out until back on her feet, or at least the 40K she owes is paid back... But given what she earns that might take a long time.

Well a couple of issues. What equity does she have in the house? Can she postpone or extend repayment of the £40k to her ex partner.

Share this post


Link to post
Share on other sites

Well a couple of issues. What equity does she have in the house? Can she postpone or extend repayment of the £40k to her ex partner.

It's a 2 bed terrace, with no parking and a tiny garden, she thinks its worth £220k? 220K in same area will buy you a 3 bed detached with small garden and off street parking! In the current climate it is prolly worth (with luck) the 165K she paid for it.

So basically no equity!

Postpone the repayment, Well she could very easily as it was all off the radar, so if she wanted to "default", he wouldn't have a leg to stand on. But I think/hope she has more morales than that TBH.

Share this post


Link to post
Share on other sites

Is she aware that if she goes bankrupt the Trustee in bankruptcy may be able to ask the ex for some / all of the money back?

Also, if she gets repod the council will try and say she made herself intentionally homeless :(

Share this post


Link to post
Share on other sites

Best offer I can make is rent free accommodation/food while she rents it out until back on her feet, or at least the 40K she owes is paid back... But given what she earns that might take a long time.

Good family, helping out with the basics. Why didn't she stick with the man who believed in her enough to make a loan of £40K?

I hate to say this: before the lender gets an order for possession, she might speak to the CAB with a view to getting a place from the local authority (priority because of the dependent child) - once the foot is in the door, she can't be shifted. If the CAB thinks that's a possibility, she may decline your offer and go with the best "husband" she's ever likely to have.

Takes the pressure off you (and puts it on the rest of us). Sad country.

Share this post


Link to post
Share on other sites

So Bank of Mum and Dad is all tapped out, Bank of Brother and Sister is struggling. Time to turn to the kids - after all they're the ones who'll be paying off all this debt so they might as well start now.

Share this post


Link to post
Share on other sites

So basically no equity!

Postpone the repayment, Well she could very easily as it was all off the radar, so if she wanted to "default", he wouldn't have a leg to stand on. But I think/hope she has more morals than that TBH.

It's a question of priorities.

Her first priority is to provide shelter for her child and herself. If she can't afford to repay her ex-partner right now, then she will have to make him wait. It's not a question of morals, you say she intends to repay him when she can, clearly that is not now.

Next thing is to claim whatever benefits she is entitled to; she has a business and I presume it is making profits, therefore she may not qualify for much but she should check to make sure. She may be entitled to Child Tax Credit for her son.

The interest on a mortgage of £125k is around £500 a month, probably not much more than rent would be. FWIW in her shoes I'd be inclined to hang on.

Share this post


Link to post
Share on other sites

Her first priority is to provide shelter for her child and herself. If she can't afford to repay her ex-partner right now, then she will have to make him wait. It's not a question of morals, you say she intends to repay him when she can, clearly that is not now.

Next thing is to claim whatever benefits she is entitled to; she has a business and I presume it is making profits, therefore she may not qualify for much but she should check to make sure. She may be entitled to Child Tax Credit for her son.

A few things don't seem to work out here... she has a 125% mortgage on a property which she paid 165k for. She had a 40k deposit, for me none of that adds up.

I don't know her so won't judge.

If it were me I'd possibly do what you are suggesting, offer a place to stay, but under no circumstances would I give her a penny. The figures I mentioned above suggest there is far more than an a person falling on hard times, it's somebody playing the system and crashing badly. She took the risks and she needs to face the fall out.

Share this post


Link to post
Share on other sites

i would give her sympathy and not a lot more.......too risky for you as we all do not know what is around the next corner..giving her money will just get swallowed up amongst the other clutter...

Share this post


Link to post
Share on other sites

A few things don't seem to work out here... she has a 125% mortgage on a property which she paid 165k for. She had a 40k deposit, for me none of that adds up.

I don't know her so won't judge.

If it were me I'd possibly do what you are suggesting, offer a place to stay, but under no circumstances would I give her a penny. The figures I mentioned above suggest there is far more than an a person falling on hard times, it's somebody playing the system and crashing badly. She took the risks and she needs to face the fall out.

It's a £125K mortgage IO on a £165K property. 40K deposit coming from her now ex.

Share this post


Link to post
Share on other sites

Disclaimer: I am not a lawyer/financial adviser etc....

You say she's got a 2-bed home, and that her kid has finished education, so either:

  1. He gets a job and starts paying towards the housekeeping.
  2. He gets a job, gets out, and his mum can sell up and downsize.

Kicking kids out from home is hard, but has to be done; either that or downsize anyway and make her kid sleep on the sofa in the lounge, which would be a very big hint as to what he should be doing... ;)

Anyway, my point is that if she wants help, then she has to be willing to make sacrifices herself, including moving into a smaller home...

Share this post


Link to post
Share on other sites

It's a £125K mortgage IO on a £165K property. 40K deposit coming from her now ex.

My deepest apologies, I had been reading the "Northern Rock Won't Repossess" thread immediately before this one and when I saw 125K subconsciously converted it to 125%.

If she thinks it's worth 220K then why not sell it, she will have the 40k to pay back and 70K profit to put back in to a small flat.

Of course you know it's not worth 220K but perhaps getting somebody independent around to tell her that, i.e. an estate agent, will put things in to perspective and force her down a certain path.

Share this post


Link to post
Share on other sites

Disclaimer: I am not a lawyer/financial adviser etc....

You say she's got a 2-bed home, and that her kid has finished education, so either:

  1. He gets a job and starts paying towards the housekeeping.

  2. He gets a job, gets out, and his mum can sell up and downsize.

Kicking kids out from home is hard, but has to be done; either that or downsize anyway and make her kid sleep on the sofa in the lounge, which would be a very big hint as to what he should be doing... ;)

Anyway, my point is that if she wants help, then she has to be willing to make sacrifices herself, including moving into a smaller home...

Er, what do you think a 16yo is likely to earn? Youth unemployment is horrific right now, even full time NMW is hard to come by. Putting a child on the street in the middle of the worst job market in 80 years is not the answer to any sort of sensible question.

Share this post


Link to post
Share on other sites

Er, what do you think a 16yo is likely to earn? Youth unemployment is horrific right now, even full time NMW is hard to come by. Putting a child on the street in the middle of the worst job market in 80 years is not the answer to any sort of sensible question.

If he can't earn much and may not even be able to get a job isn't it better to stay on at school or go on to a college course or something? With a recession on it may be better to keep studying and build up qualifications than launch yourself out there. I commend you for being decent enough to offer your sister your savings but you might need this yourself. I worked as a CAB advisor for a while and life is full of unexpected thingies. If your sister downsizes your nephew can sleep in the living room and use storage space for his things (or she can). Better than being on the street - look upon it as a temporary measure. I know of one person who rented a 1 bed flat and curtained off a section of the LR for her son. The extra money saved went towards the deposit on their 2 bed house - the inconvenience lasted only for a few years. If you get a largish LR, a decent sized hallway or lots of storage space then you can spread the 'bedroom' throughout the house.

Share this post


Link to post
Share on other sites

Had my sister over at the weekend for BBQ, late into the evening when my partner went to bed she got a bit tearful.

Turns out her mortgage is BTL Interest only 125K, even though she is living in the house.

She runs her own business and has 15 year old son. In 12 months her BTL mortgage resets to 7.5%, I asked why she doesn't just re-mortgage on a normal fix and admit to living there (Split with partner, so perfectly valid)

Reply was that after losing tax credits (Son not going into further education)/Paying rent on business property/Paying staff costs (only 2x) and paying back the Ex that lent her the 40K deposit she only clears £700 a month!

I offered to pay mortgage for 6 months if she really gets stuck, and put her up rent free if she lets it out...But no way in hell am I putting our family home on the line for that.... which is basically what was asked me to do!

Offered 8k(all my savings) to reduce principle but that will not be enough.

I suggested asking other family members....She already had... But turns out of my 7 siblings I am the only one that has provable income!

What a lovely brother you are - I hope she appreciates you. I think your offer of a roof over her head so that she can let out again (until she remortgages?) was very generous alone.

Share this post


Link to post
Share on other sites

What a lovely brother you are - I hope she appreciates you. I think your offer of a roof over her head so that she can let out again (until she remortgages?) was very generous alone.

Well maybe she could sell to rent.

Seriously the rent may be much less than the mortgage, plus maybe she could also move somewhere that is cheaper for the same house too.

And by the sounds of it she would have have 40k cash to pay her ex off, no mortgage to worry about and an option to go to council housing if it is still too much of a struggle without going bankrupt.

Most houses rent yield at 5% so if she will be paying 7.5% interest then renting will be cheaper, plus no risk of neg-eq.

Share this post


Link to post
Share on other sites

I'm puzzled why she is giving any priority at all to paying back the 'deposit' to her ex.

If that was used to purchase the house then clearly she has no means of paying that back without a sale. Hence he'll have to wait in line. I'm guessing nobody forced him to lend it to her without security or a legal contract.

It would seem sensible to sell up if she can agree some settlement with her 'ex' which may be less than the original 'loan' - he freely took a risk - hey ho, them's the breaks.

That should resolve most of her immediate problems, then she can rent a room/s off you/whoever or go on a social list I should imagine.

Nobody's died after all - it's just 'money'. Everyone will get over it.

Good luck!

Edit: Btw, from the way I've understood your explanation, anyone helping her out financially is in effect subsidising her ex, which seems a little daft when it would appear he's no longer got a familial connection. Can't see much of an argument for doing that. I dare say she may wish to do that, pay back what she has imagined in her head is a 'debt' but that's just the false picture she's understandably painted in her head and doesn't exist in reality. Perhaps her priority is to remap her emotional thinking on that one. It seems to be the main issue.

Edited by Red Karma

Share this post


Link to post
Share on other sites

[]

Why does she not suggest to ex swopping the deposit in exchange for no maintanance for son.

Ex is not father of the Son...He's just a plain old Ex boyfriend, that helped her out LOADS and was a much better father to her son than his genetic one. Hence failure to pay him back that 0% interest debt given with free will and no strings would be shameful.

Sure it may not effect her credit rating, but when you agree to terms that good, from someone you formerly loved it becomes a moral issue. Moral trumps financial every time (Although there is a trend to call these people stupid). Hence I will back her until her moral debts are paid at very least.

Share this post


Link to post
Share on other sites

Ex is not father of the Son...He's just a plain old Ex boyfriend, that helped her out LOADS and was a much better father to her son than his genetic one. Hence failure to pay him back that 0% interest debt given with free will and no strings would be shameful.

Sure it may not effect her credit rating, but when you agree to terms that good, from someone you formerly loved it becomes a moral issue. Moral trumps financial every time (Although there is a trend to call these people stupid). Hence I will back her until her moral debts are paid at very least.

We're talking about women here, money easily comes out on top over morals!

Share this post


Link to post
Share on other sites

Ex is not father of the Son...He's just a plain old Ex boyfriend, that helped her out LOADS and was a much better father to her son than his genetic one. Hence failure to pay him back that 0% interest debt given with free will and no strings would be shameful.

Sure it may not effect her credit rating, but when you agree to terms that good, from someone you formerly loved it becomes a moral issue. Moral trumps financial every time (Although there is a trend to call these people stupid). Hence I will back her until her moral debts are paid at very least.

That's you/her choice then. Sounds to me like you/her are creating up your own 'morality' and inventing imaginary 'clauses' in the non-existent terms of this 'no strings' 'loan'. Which is perfectly fine of course, but has consequences, none of which you seem to think are palatable either.

Is he actualyl demanding repayment of this 'no strings' 0% loan?

Edited by Red Karma

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.