Granny Annex Funding
Discussion
The short version: In a nutshell I want to raise £50k for 6-9 months secured on my mother's flat valued at £125k, which will be sold at the end of the granny annex build and the loan repaid.
The full story: My mother is 91 years old, physically a bit stiff and with mild dementia. I would expect her to go on for a few more years yet. She currently lives on her own 50 miles away from me (her only child) and my family. Carers go in daily to check on her and make sure she is fed but she has said she would like to come over and live with us which we are happy with. She is not interested in going to a home and I am not interested in putting her in one. I hold Power of Attorney for finance and property.
Our house as it stands is not suitable for her and we are in the process of building a granny annex for her to move in to. The build has gone well and the roof is on and it is watertight. So far it has been funded from my mother's savings (£40k) but we knew that it wouldn't be enough to finish the job and an equity release application has been ongoing since July to fund the rest of the build.
We tried to get the high street banks to lend the money secured on her existing flat but they weren't interested - we are looking to borrow £50k secured on a £125k property with no mortgage on it and we only want the loan for 6-9 months as her existing property will be sold when she moves in with us and the loan repaid. We were advised that equity release was the only way forward and that's why went went with it. (even though to me it seemed like too short a period for an ER company to be interested in).
Anyway the application was approved and the offer issued. We signed the documents and waited for the money. Yesterday I was told the offer had been withdrawn as it was too short a period of loan for the company! I'll challenge them on their incompetence later but for now what I need to do is raise the money I need to finish the build and move my mother in.
I can't extend my own mortgage to cover it - I don't have the income to cover that. Neither can I take out a loan in my name for that amount. Anything I do needs to be in my mother's name.
So in a nutshell I want to raise £50k for 6-9 months secured on my mother's flat valued at £125k, which will be sold at the end of the annex build and the loan repaid.
Any ideas?
The full story: My mother is 91 years old, physically a bit stiff and with mild dementia. I would expect her to go on for a few more years yet. She currently lives on her own 50 miles away from me (her only child) and my family. Carers go in daily to check on her and make sure she is fed but she has said she would like to come over and live with us which we are happy with. She is not interested in going to a home and I am not interested in putting her in one. I hold Power of Attorney for finance and property.
Our house as it stands is not suitable for her and we are in the process of building a granny annex for her to move in to. The build has gone well and the roof is on and it is watertight. So far it has been funded from my mother's savings (£40k) but we knew that it wouldn't be enough to finish the job and an equity release application has been ongoing since July to fund the rest of the build.
We tried to get the high street banks to lend the money secured on her existing flat but they weren't interested - we are looking to borrow £50k secured on a £125k property with no mortgage on it and we only want the loan for 6-9 months as her existing property will be sold when she moves in with us and the loan repaid. We were advised that equity release was the only way forward and that's why went went with it. (even though to me it seemed like too short a period for an ER company to be interested in).
Anyway the application was approved and the offer issued. We signed the documents and waited for the money. Yesterday I was told the offer had been withdrawn as it was too short a period of loan for the company! I'll challenge them on their incompetence later but for now what I need to do is raise the money I need to finish the build and move my mother in.
I can't extend my own mortgage to cover it - I don't have the income to cover that. Neither can I take out a loan in my name for that amount. Anything I do needs to be in my mother's name.
So in a nutshell I want to raise £50k for 6-9 months secured on my mother's flat valued at £125k, which will be sold at the end of the annex build and the loan repaid.
Any ideas?
Edited by arcturus on Tuesday 26th November 13:40
friend runs this and they do that kind of thing, might be a little small but you never know..
http://www.jordanbank.co.uk/structured-property-fi...
agani, the candys have this, worth a try..
http://www.omnicapital.co.uk/
http://www.jordanbank.co.uk/structured-property-fi...
agani, the candys have this, worth a try..
http://www.omnicapital.co.uk/
Not sure why it needs to be in your mother's name, it does complicate matters. Short term bridging could work, 1% a month and you want to be sure you can sell up her place at the end pdq.
The Equity release mortgage sounds scary, they normally carry specific rules on the resident leaving the property but not going in to residential care making it expensive to stop. Not surprised they cancelled it.
Do you have an O/H?? Could Mum give them the house, Let to Buy remortgage, hey presto and not in your name.
Straw-clutching I realise.
The Equity release mortgage sounds scary, they normally carry specific rules on the resident leaving the property but not going in to residential care making it expensive to stop. Not surprised they cancelled it.
Do you have an O/H?? Could Mum give them the house, Let to Buy remortgage, hey presto and not in your name.
Straw-clutching I realise.
Hmmm. It's going to be difficult, expensive or both. Finance for the elderly is usually a rip-off because of the risks involved. How long would it take to finish the build? You may find that selling your mother's place and squeezing her in to your house for a while (or even a home on the strict understanding that it's a temporary thing) until the annex is finished is the best way forward - even though it's a PITA for you all.
I've looked into similar options for my own family and basically it's really difficult to do any way other than a straightforward extension to your own mortgage.
The only ones I can think of are:
You may find that Age Concern have some ideas of sources of finance for people in this situation
Your current lender may consider you for a bigger loan for a fixed period if your payment record is good even though it takes you over their limits. But you can only do this through a one to one consultation - any automated application will just chuck it out
Some of the better building societies can do more imaginative loans, because they're run by human beings not massive automated credits scoring systems
Good luck OP - it's good to hear rom a chap who is putting his old mum's needs before his own, rather than just calling the local old folks home....
I've looked into similar options for my own family and basically it's really difficult to do any way other than a straightforward extension to your own mortgage.
The only ones I can think of are:
You may find that Age Concern have some ideas of sources of finance for people in this situation
Your current lender may consider you for a bigger loan for a fixed period if your payment record is good even though it takes you over their limits. But you can only do this through a one to one consultation - any automated application will just chuck it out
Some of the better building societies can do more imaginative loans, because they're run by human beings not massive automated credits scoring systems
Good luck OP - it's good to hear rom a chap who is putting his old mum's needs before his own, rather than just calling the local old folks home....
Thanks for the suggestions. We are considering going for the sell it and suffer for 8 weeks option. Not at all ideal for us and especially not ideal for my mother, but it may be the only way.
Can someone explain why it is such a poor risk for the banks? They could put a charge on the flat to secure their loan. The flat would be sold within 6 months and the loan repaid. I'm struggling to see where the risk is for them, to my mind it is easy, safe money for them. But i'm in IT not finance.
Can someone explain why it is such a poor risk for the banks? They could put a charge on the flat to secure their loan. The flat would be sold within 6 months and the loan repaid. I'm struggling to see where the risk is for them, to my mind it is easy, safe money for them. But i'm in IT not finance.
It's a risk for the banks because what happens if she doesn't move in with you and decides to stay put, and then no one settles the mortgage. There is no way in the world any bank would want to be seen to repossess a flat from a 90 year old lady.
Sounds like a std bridging situation, no doubt couple grand in fees plus 1% a month. So for six months at £50k probably less than £5k
Ps forgot to add
Well done for supporting and taking care of your mum :-)
Sounds like a std bridging situation, no doubt couple grand in fees plus 1% a month. So for six months at £50k probably less than £5k
Ps forgot to add
Well done for supporting and taking care of your mum :-)
Edited by qureshia on Tuesday 26th November 23:37
qureshia said:
It's a risk for the banks because what happens if she doesn't move in with you and decides to stay put, and then no one settles the mortgage. There is no way in the world any bank would want to be seen to repossess a flat from a 90 year old lady.
Oh I see, thanks for that explanation. Obviously in our minds that would never happen - she wants to be over with us asap, but when you put it like that I see your point.I too thought it would be a bridging situation but the high street banks i visited were not interested. We'll get there in the end.
Edited by arcturus on Tuesday 26th November 23:45
OP, as you are intending to use your mother's "estate" to fund the annex, are you aware of the "deprivation of assets" legislation and its possible impact on you if your mother ever needs to go into a home?
There was a case on the Alzheimer's society website of a daughter who did exactly what you are doing, used her mother's assets to build a granny annex. Unfortunately, her mother then needed to go into a home and the council chased the daughter for the care home fees.
The council's view was that the daughter had increased the value of her home by diverting funds that could have been used to pay the fees. Sorry to say I don't know the final outcome as the daughter stopped posting before the case finished.
I completely disagree with the legislation, but I thought you ought to be aware if not already. Whilst it's a bit late to undo the work you might want to take some professional advice before you use your mothers estate as collateral.
Edit: just found this link if it helps
http://forum.alzheimers.org.uk/showthread.php?6099...
There was a case on the Alzheimer's society website of a daughter who did exactly what you are doing, used her mother's assets to build a granny annex. Unfortunately, her mother then needed to go into a home and the council chased the daughter for the care home fees.
The council's view was that the daughter had increased the value of her home by diverting funds that could have been used to pay the fees. Sorry to say I don't know the final outcome as the daughter stopped posting before the case finished.
I completely disagree with the legislation, but I thought you ought to be aware if not already. Whilst it's a bit late to undo the work you might want to take some professional advice before you use your mothers estate as collateral.
Edit: just found this link if it helps
http://forum.alzheimers.org.uk/showthread.php?6099...
Edited by uknick on Wednesday 27th November 08:48
This might be a longshot, but do you or your mother have any valuable assets along the line of gold, jewelry, art, antiques, classic cars etc...? You would need about £70K worth to get the £50K bridging finance you need and you would be paying rates of around 3% a month, so more expensive than a normal bridging loan. My finance company arranges this sort of thing a lot when a traditional bridging loan gets declined or is not suitable.
quick update, i've just been on the phone dealing with another case and mentioned your situation, apparently it can be done with a bridging loan, even with your mothers age being 91, there are a couple of lenders that will look at it given the above criteria. Your looking at around 1.25% a month plus fees. The lenders will want to see the property on the market now though if that is your exit. There was another option mentioned of a pensioners mortgage if she is in receipt of a half decent pension. If you want to look into this further you can pm me.
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