Mortgage additional borrowing

[Leemcd]

Hi all,

But of a weird one but scenario so apologies!

Four years ago myself and wife purchased a property with the in laws, house was £250k and they kicked in £70k. In turn we pay the entire mortgage (should add the £70k had to be gifted). Fast forward to now and ideally we want to buy them out, the house is valued at 265-270k, we would like to take 50k from the house plus 20k from us to give them the 70k back.

Question is... is it possible to borrow the 50k against the house to then give someone else?

Sorry about the rambling post!

[abzmike]

It depends how much is outstanding on the mortgage, and what adding so much does to your loan to value.

[Leemcd]

abzmike said:

It depends how much is outstanding on the mortgage, and what adding so much does to your loan to value.

Ltv all good, really the question they ask is the reason for the additional borrowing, will they accept its to give to a third party?

[abzmike]

Leemcd said:

Ltv all good, really the question they ask is the reason for the additional borrowing, will they accept its to give to a third party?

I guess if they ask tell the truth and say paying off the gift/loan from the start. Anything else will need you to get very creative.

[Leemcd]

Figured as much!

[Sarnie]

Leemcd said:

Hi all,

But of a weird one but scenario so apologies!

Four years ago myself and wife purchased a property with the in laws, house was £250k and they kicked in £70k. In turn we pay the entire mortgage (should add the £70k had to be gifted). Fast forward to now and ideally we want to buy them out, the house is valued at 265-270k, we would like to take 50k from the house plus 20k from us to give them the 70k back.

Question is... is it possible to borrow the 50k against the house to then give someone else?

Sorry about the rambling post!

Whats the current balance?

[Leemcd]

Sarnie said:

Leemcd said:

Hi all,

But of a weird one but scenario so apologies!

Four years ago myself and wife purchased a property with the in laws, house was £250k and they kicked in £70k. In turn we pay the entire mortgage (should add the £70k had to be gifted). Fast forward to now and ideally we want to buy them out, the house is valued at 265-270k, we would like to take 50k from the house plus 20k from us to give them the 70k back.

Question is... is it possible to borrow the 50k against the house to then give someone else?

Sorry about the rambling post!

Whats the current balance?

168k left on the house

[Sarnie]

Leemcd said:

168k left on the house

In the 85% LTV category, you are likely to come across questioning around the use of the funds, especially if they class repaying parents as debt consolidation.......

[Leemcd]

Sarnie said:

In the 85% LTV category, you are likely to come across questioning around the use of the funds, especially if they class repaying parents as debt consolidation.......

would they accept paying in laws as consolidation? (mortgage with Nationwide).

[sideways sid]

Semantics perhaps, but you're suggesting borrowing money to 'repay' an amount of money that you probably certified was a gift four years ago, and therefore would not need to be repaid.

I can't imagine there are any consequences, but if the lender was sufficiently interested, could this constitute some kind of breach of contract at the date of the original loan?

If the lender determined that you qualified for a lower interest rate because the £70k was equity, than you would have qualified for had the £70k been correctly determined as debt, is there any realistic possibility of the lender now penalising the borrower retrospectively?

[foiled]

What's wrong with telling them it's for home improvements?

I borrowed a similar amount last year, and didn't get any probing questions, seemed happy that it was for a kitchen extension. No further questions asked.

Could have put the entire amount on roulette for all they have known.

[Sarnie]

foiled said:

What's wrong with telling them it's for home improvements?

I borrowed a similar amount last year, and didn't get any probing questions, seemed happy that it was for a kitchen extension. No further questions asked.

Could have put the entire amount on roulette for all they have known.

Was it at 85% LTV during a Pandemic?

[Leemcd]

sideways sid said:

Semantics perhaps, but you're suggesting borrowing money to 'repay' an amount of money that you probably certified was a gift four years ago, and therefore would not need to be repaid.

I can't imagine there are any consequences, but if the lender was sufficiently interested, could this constitute some kind of breach of contract at the date of the original loan?

If the lender determined that you qualified for a lower interest rate because the £70k was equity, than you would have qualified for had the £70k been correctly determined as debt, is there any realistic possibility of the lender now penalising the borrower retrospectively?

very good point..

[Killer2005]

sideways sid said:

Semantics perhaps, but you're suggesting borrowing money to 'repay' an amount of money that you probably certified was a gift four years ago, and therefore would not need to be repaid.

I can't imagine there are any consequences, but if the lender was sufficiently interested, could this constitute some kind of breach of contract at the date of the original loan?

If the OP were going to another lender then it likely wouldn't really matter. If a further advance/additional lending with the same lender then questions could be asked.

Again depending on the lender it may be deemed as debt consolidation so could be capped by policy rules for debt consolidation.