Repayment of Buy to Let mortgages after husband’s death

by Readers Question

10:12 AM, 15th July 2016
About 2 years ago

Repayment of Buy to Let mortgages after husband’s death

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Repayment of Buy to Let mortgages after husband’s death

My husband, who passed away in December, had 3 buy to let properties with mortgages on his name. Two interest only with Mortgage Express (ME) and a repayment one with The Mortgage Works (TMW). All properties are tenanted and there haven’t been any arrears on any of them.mortgage

In April both mortgage companies informed me that I must repay the mortgages within 1 year from my husband’s death.

I myself not in the position to re-mortgage them because I was a housewife without income.

One of those properties (ME) has been on the market since July 2015, second one I put on sale with the real estate agency in April.

I want try to keep the property, which has re-payment mortgage TMW, for myself as a future PRP so it is not on the market at the moment.

One of the flats, which is on sale, is under offer now and assuming the sale goes through I will be able to redeem one of the mortgages with ME and fully redeem the TMW mortgage with the surplus from the sale and my savings.

My main concern is if I cannot sell both or one of ME properties by December, but keep all the mortgage payments; can ME repossess the properties without giving me more time to sell them? Another concern is that ME will demand the surplus from the sale to cover the second mortgage, repossess the flat anyway and sell for penny just to recover their mortgage.

I can borrow some money from my friends and redeem repayment mortgage with ME now and after that

I will own it outright. Can ME repossess my fully paid home or force me to sell it?

Thank you,
Natalia



Comments

Neil Patterson

10:18 AM, 15th July 2016
About 2 years ago

Dear Natalia,

I am very sorry to hear of your husband's passing and please accept my condolences.

It sounds like you are doing everything you can and I know you have probably read all the stories about how aggressive ME can be about getting loans repaid. However, I really do think that if you keep them informed all along the way I hope they would be sympathetic and give you the time you need if for any reason you run over the year.

Communication in this circumstance I think is best.

If you do for any reason run into any problems Peter Fisher is a legal expert on this matter especially with ME and if you need his help later on he can be contacted through his members profile >> https://www.property118.com/member/?id=10845

I hope that helps a little

Adrian Jones

11:26 AM, 15th July 2016
About 2 years ago

If you wish to continue letting them, I would suggest you speak to a mortgage broker.

Ross McColl

11:30 AM, 15th July 2016
About 2 years ago

In my honest opinion, MX will try to enforce the right to consolidate, they will take the surplus proceeds from sale and put it against the other mortgage. If you decide to not pay one of the MX mortgages it is likely that after 3 months of non-payment they will instruct LPA's if they think you are up to something.

This is probably not what you wanted to hear, you may be lucky and slip through the net if you only have 2 with them.
Good luck, all the best.

Ross McColl

11:33 AM, 15th July 2016
About 2 years ago

Reply to the comment left by "Ross McColl" at "15/07/2016 - 11:30":

If you raise enough cash to redeem, this is your best chance. I would also try to sell the other because If you redeem one then let the other go, they will sell it through LPA's, then come after you for any shortfall, bearing in mind it will be sold below market value and there will be LPA fees added.

Michael Freer

11:46 AM, 15th July 2016
About 2 years ago

Reply to the comment left by "Adrian Jones" at "15/07/2016 - 11:26":

Absolutely Adrian, (almost) regardless of your circumstance Natalia there will be BTL mortgages out there that you can apply for. There are many brokers on this site so you don't have to look too far to find someone who can help you find them.

Mandy Thomson

13:12 PM, 15th July 2016
About 2 years ago

Reply to the comment left by "Michael Freer" at "15/07/2016 - 11:46":

Yes, provided you have a reasonable credit score (which doesn't depend on your income) and don't have a lot of unsecured borrowing there are many BTL mortgages available which take the rental payments as the repayment vehicle, not your income (in other words, they don't look at your income at all, just your projected rental income).

I would also advise you to take out rent guarantee insurance which will cover your tenants' rent should they default for whatever reason - you will need up to date references for the tenants.

Kate Mellor

15:53 PM, 15th July 2016
About 2 years ago

I would agree with Adrian and others, your first port of call should be a good BTL mortgage advisor. If you can arrange a remortgage in your name for property two of the ME properties you will remove that pressure up front and be free to use the surplus funds from the sale you have agreed to redeem TMW property.

As Mandy says you don't have to have an income from a job to qualify for a remortgage, income from property is still income. If your TMW property is paid off this will increase the income relative to debt which will help you to be accepted and in addition if it were necessary you could potentially use it as additional security for any new borrowing.

There are some very low fixed and tracker rates just now which you could take advantage of with a view to putting the property on the market towards the end of the fixed term if that's what you wanted to do. You don't mention your age, but some lenders are lending up to age 85 now although the rate will be higher. Paragon Mortgages for one.

Again though, discuss all this with an experienced mortgage advisor before you do anything. Ours charges £50 for the application submission process & then a further £495 at the point an offer is issued. This is well worth it for the advice, industry knowledge, practical time saving and also peace of mind.

If for some reason you can't or don't remortgage before your sale completes, you'll have to take a look at your facility letter/T&Cs for the two ME loans to see whether there is a condition where each property acts as security for all borrowing in order to know whether they can insist on your using all proceeds from the sale towards your borrowing with them. If it's deemed a business loan I can pretty much guarantee that this will be the case.

Do you have a contact person at ME who deals with your loans? If so, ask them the questions so you have the facts you need to plan ahead. It may be that they will start adding charges or penalty rates to your loan if you run over, this is something you need to know.

You state that you are maintaining all mortgage payments on all three loans and from what you say you can afford to keep doing so, therefore I think it unlikely that they would take action to repossess a property as long as you keep in close contact with them and they are happy that you are in the process of getting things resolved. Also if you can show them your figures in regard to your income from the three properties and anywhere else along with details of your mortgage repayment figures and they can see that you have means to maintain the mortgages this will help.

Good luck with it all.

Lyn Mallee

16:36 PM, 15th July 2016
About 2 years ago

Unfortunately I have been through the same thing with mortgage express. I had two properties in my late husbands name and they gave me 12 months to redeem. I only managed to do one within the 12 month period and they gave me 12 months to do the second one but 6 months into the second one they put more pressure on and reduced the timescale and added extra interest to the final redemption figure. To begin with they were very understanding and UKAR would have a meeting with me every couple of months. I did build up a very good relationship with UKAR but if you have meetings with them make sure you have a witness present and everything is documented so they can't change the "goal posts". I had other properties with them but they were in joint names so were unaffected and when I sold one of these to help resolve the mortgages in question they did not use their "right to condolidate" but this was only because I was meeting with them regularly and they knew I was going to spend the money on one of the properties in question so that I could remortgage.
I also "don't have a job" as I am a full-time landlord and with a good F.A remortgaged the properties in question - mine just took a while because they were in negative equity at the time. I am happy to discuss further in private how I worked with MX

Adrian Jones

17:26 PM, 15th July 2016
About 2 years ago

Reply to the comment left by "Lyn Mallee" at "15/07/2016 - 16:36":

Hi Lyn. What was their justification for adding extra interest to the redemption figure?

Ian Narbeth

18:09 PM, 15th July 2016
About 2 years ago

Reply to the comment left by "Kate Mellor" at "15/07/2016 - 15:53":

Kate, you write: "You state that you are maintaining all mortgage payments on all three loans and from what you say you can afford to keep doing so, therefore I think it unlikely that they would take action to repossess a property as long as you keep in close contact with them and they are happy that you are in the process of getting things resolved."

You are in danger of giving false comfort to Natalia. Natalia, you should be aware that Mortgage Express are getting out of the mortgage business and if the loans are not repaid within the 12 months they are entitled to and will very likely step in and sell the properties, taking a lower price than you may think they are worth.

Kate, you also say to look at "the two ME loans to see whether there is a condition where each property acts as security for all borrowing". You won't easily find it unless you know your way around the Law of Property Act 1925. However, it is 99.9999% certain ME can consolidate so Natalia won't be able to redeem one mortgage without redeeming both.

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