Btl Sister Asks Me To Assist With New Mortgage Application

[dissident junk]

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!

My advice?

Move business premises to something cheaper, or, if possible, downsize into home.

Fire one or both members of staff (maybe employ son instead?)

Negotiate with ex to reduce or delay repayments on deposit.

And/or ...

Sell home.

And/or ...

Apply for full time employment positions, see if anyone bites. If so, take job and liquidate business.

£700 a month is simply not enough for her to pay a mortgage and her living costs. Even with tax credits for one son, I can't imagine she would receive a sum that would make her set-up viable. Seems like there could be some denial or bad decision-making going on here, and you have no guarantee that this would not stop if you helped her out.

[eric pebble]

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.

This is SO BL00DY SHOCKING - and really P1SSES ME OFF. :angry:

[eric pebble]

This is SO BL00DY SHOCKING - and really P1SSES ME OFF. :angry:

yeah.... :angry: :angry:

[Abstra]

I'd give her your money if it would allow her to keep the property but in this case it won't. She's going to sink your money as well. Its difficult. Prise the thing out of her fingers. She has to let it go. Let it get repossessed so she gets a HS place. Tell her to squirrel some cash away.

[Angela]

If the equitty in the house is 40k might her ex take the house as a btl as payment for the 40k. When she's washed her hands of house and 40k debt she could borrow your 8k or part of it to set herself up in a rental flat and then repay you. If she got into more trouble maybe she could get some sort of benefit to help pay the rent at a later date? Not sure how that works but she'd offload most of her debt that way.

Good luck and be careful you do not do her a disfavour by sinking your money into something that does not help in the end.