Clearing Mortgage

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Hi

Myself and husband are planning on selling a second property which had been rented out. The tenants left suddenly last November. The expected sale price is 400k approx. After we clear the mortgage on this property and pay cost including Capital Gains, we should have around 240k left.

Our residential property has a mortgage of about 210K. Both are with Pepper Finance and Residential property is secured against house we are selling. 70k of the 210k had been warehoused back in 2008. We need to get consent of sale from Pepper to sell the second price and that is where we are, at the moment,

Our wish is to clear the active mortgage of 140k and then start paying the warehoused amount back over the remainder of the term of the mortgage, which is another 12years.

My first question is can we be 'made' pay back the full 210k. Pepper are being a bit vague and can't seem to get to whoever is in position to give us an answer. We have been told to put proposal in place and it will go to a credit committee.

I know we are in a hugely fortunate position in that we could be potentially mortgage free, but after 20yrs of financially struggling (had to liquidate a business during recession and then spouse has been self employed since), if we could keep 100k, we could get our children through college and renovate our own house, which has suffered about the same 20yrs of neglect.

We would be able to cover the 70K over the next 12 yrs and more then likely clear earlier with our combined income. Also we have the security of my lump sum upon retirement in 10yrs which covers the 70k,

Another question is, can we be charged interest on the 70k, if Pepper go for this arrangement.

I have asked our solicitor dealing with the sale and he says it's up to pepper so none the wiser there,

I should say also, we have got into arrears on both properties since last November when we lost the rental income and my husband's work suddenly stopped. The rented house needed a lot of work to get onto the market so any money has gone towards that. We asked for break on both mortgages until the house was sold, which is still being reviewed but think everything is caught up with the consent to sale now. My husband is back working now also

Any thoughts/ advice would be greatly appreciated

HorseSea

Only Pepper can tell you, however I know in a similar position with Start, they wanted the whole lot, before giving consent to sale of 2nd property. Even so far as requiring a reserve set (it was an auction) that ensured they would get the total mortgage cleared.

CivilCybil

The main issue I can see is that you live in house A and are selling house B.

But you've secured the mortgage for house A against house B (if I'm reading that correctly).

The mortgage for house B will be gone but you would still have a mortgage on house A. You have had payment issues in the past and again far more recently so you're a credit risk.

Essentially you're asking Pepper to allow you to keep a mortgage that no longer has security against it and where you've had problems in the past and present paying that mortgage.

I can understand your perspective but they won't be looking at it the same way as you are. They'll be deciding if you are a good credit risk for 70k over 12 years.

Your recent history plus the fact that it's a small amount over a long period (so not beneficial financially to them), I don't think the odds are in your favour but you'll have to wait and see because they'd have more info and rules and experience around it.