BTL remortgage me out and my wife in?

by Readers Question

10:33 AM, 23rd January 2017
About 2 years ago

BTL remortgage me out and my wife in?

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BTL remortgage me out and my wife in?

I wonder if you can advise or offer some thoughts please on this.take me out

My wife and I jointly own a flat which is rented out and the lender is Mortgage Express. The value is £650k. Mortgage outstanding £220k. Rent is around £2.5k p/m.My credit is very bad – with adverse on other properties I own in my name alone and 1 other property with my wife (lender BMS).

Scenario is this – can we remorgage the MX property and remove my name and just leave my wife owning the property as her credit is better then mine. A broker has said that we got agreed in principle firstly with a HIGH RATE of 8.99% where this broker suggested he arranges and we my wife stays on this rate for 6months and then re-mortgages to a standard BTL rate.

Then another broker said he can arrange a rate at 3.49% did not state lender, but said it was all up to the valuation. We did want to raise additional funds to purchase another BTL. We wanted to raise £150k on top of the £225k balance currently. Last 12months all payments up to date with MX. My wife’s income is only from the 2 properties and will be approx. £27k pa.

ALSO – another question please if I may.

I also own another flat in my name alone where the 1st charge lender is owed £200k where I’m paying 2.25% BUT GUYS THIS IS THE KILLER – I have a 2nd charge and TOGETHER the rate is 13.9% pa on a balance of £155k. With these very high monthly payments this property is almost non-profitable as it stands.

RATHER THEN SELL – is it possible to DO A GIFTED EQUITY DEPOSIT to my wife and do a remortgage in her name alone. The value is £675k – combined 1st and 2nd charge balances are £355k around. It is rented on a ROOM BY ROOM basis 5 rooms. Rental £3.6k PM..

Also the other one we own jointly BMS – can we again do the same where I remove my name and she takes over.

In essence I remove my name from all the 2 joint named properties and do a transfer or sale – gifted equity deposit to my wife. Hope this makes sense and thank you so much for all your help.

Faiza



Comments

Neil Patterson

10:44 AM, 23rd January 2017
About 2 years ago

Dear Faiza,

Your first broker at a guess is more likely to be correct, because if your wife has a joint mortgage with you and there are missed payments these will count as bad credit against her as well. Therefore your wife is also likely to find it difficult to agree mortgage lending.

On the second question if I have understood correctly then yes your wife could purchase in full the property and take out a mortgage in her sole name, but I think you are still going to have the same problem for her as above.

Neil Robb

17:21 PM, 23rd January 2017
About 2 years ago

I thought MX will be no longer lending and are trying to close their books

Simon M

18:12 PM, 23rd January 2017
About 2 years ago

You haven't mentioned if you've considered how this will be affected by the reduction of relief on mortgage interest (Clause 24) in 2020 - presume the marginal property will be loss-making and your wife will become higher-rate tax payer if she has 100% beneficial interest in 3 or 4 properties? There's a good calculator elsewhere on this site.

Ian Clifford

18:21 PM, 23rd January 2017
About 2 years ago

One of the first hurdles you will come across in any type of ownership restructuring is the financial associations that will be held with all the Credit Reference Agencies.

This will be in part due to sharing an address, but will be made stronger by any joint financial products from mortgages, loans especially secured ones, and even having a joint account.

The other red flag will be raising of additional capital, even though this being used to expand the portfolio, most lenders will not look favourably on this due to adverse credit.

If you take a step back, look objectively at the situation as is, would you lend additional monies to yourself or your wife. Your history shows poor financial planning and management, that's essentially what is flagging poor credit.

You mention you have credit problems, it would be more helpful if you could expand on this?

It would be helpful to understand any non-mortgage related credit you have. Ideally by lender, type, amount outstanding, and whether payments are up to date.

Also any CCJ's that you have that are either live or that have been settled within the last six years.

Obtaining a statutory credit report from Experian, Equifax, and Call Credit is a starting point. This can be done online if you have sufficient information to hand, at least with Experian.

http://www.experian.co.uk/consumer/statutory-report.html

https://www.equifax.co.uk/Products/credit/statutory-report.html

http://m.callcredit.co.uk/consumer-solutions/your-credit-report/statutory-credit-report

I assume you own your own residental property? If so, is this with or without mortgage?

I note that the MX property is 34% LTV as it stands? Yet the better indicator is that even your wife can only get 8.99% APR! You mentioned also being offered 3.49% subject to valuation, is this with or without the extra £150k being added to the MX property still allowing a sub 60% LTV.

You mention other properties in your sole name, again to provide objective advice more details would be needed?

Property value, mortgage amount outstanding, and another secured lending against the property.

Everyone's situation is different, but my first thought is to consider selling one or more properties to get your financial situation into a much better state, one that is sustainable and would allow you get through any potential downturn in the economy.

Utilising gifting, any available PPR relief, could minimise potential CGT payable!

In summary what you've suggested is just a sticky tape solution to a bigger problem.

Using your wife's "better" credit is a fallacy for all the reasons situated above.

I'd suggest reposting with a full view as explained above, or seeing a specialist financial adviser with debt expertise and knowledge of working in sub-prime situations.

Pleas consider carefully any advice given on this site, it's amongst the best free advice you'll get anywhere.

Good luck!

PS
If you want to send me a PM, I'd be more than happy to offer advice on a non-fee basis.

I have experience in working with people with debt issues in the voluntary sector, but need to stress I don't hold any professional accreditation other than academic qualifications in Finance Law.

Matt Commercial Trust

9:23 AM, 24th January 2017
About 2 years ago

Dear Faiza,

Firstly, in essence you may be able to remortgage and take yourself off the title to the property, and transfer the equity to your wife, but there is no guarantee. In terms of remortgaging rates and options, there is no one answer to this, as lender criteria is very complex.

As Neil has said above, as your wife has been on the mortgage with you, your adverse credit may directly impact her getting a mortgage in her own right.

Depending on the level and nature of your adverse credit, there are some lenders available who specialise in mortgages for those with impaired credit, who may be able to help you with a lower rate.


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