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 Yesterday I was told the offer had been withdrawn as it was too short a period of loan for the company!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
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.
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
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