Private Mortgage

[PlanningNow]

Hi all, I purchased my property just over two years ago via a combination of a mortgage from the HSBC and a private mortgage from my parents (our solicitor drew up the documentation regarding the loan from my parents).

Im now considering that in the not too distant future I may have to look at an IVA or BR and was wondering how this would affect my mortgage provided by parents which has a second charge on the property. I would sooner sell the house and give them back their money (or as much as possible) than see it go to my creditors.

Also, when the two mortgage values are combined there is no equity on the property so would I have to sell if I chose BR as a route out? I can afford the mortgage repayments its just all the other unsecured finance which is dragging me down right now.

I really want this to be a last resort though, as like others, im not trying to shurk my responsibility. I ran the debt up so feel I should pay it off. To do this Im looking at renting my property out and moving in with family for a period of time until I get things balanced but need to consider all options.

Thanks

[MelanieGiles]

Hi Planningnow and welcome to the forum

Assuming that the legal documentation regarding your parents security was properly drawn up, and registered at H M Land Registry, then their interest in your property is valid and they would be paid in priority to the unsecured creditors.

If you choose bankruptcy as an option, and there is no equity, then it is unlikely that there would need to be a sale of the property - and you could get your parents to acquire your beneficial interest for a nominal sum - usually £1 plus the legal costs of transfer.

If you are going to rent the property out - make sure that the rental you will receive will at least cover the mortgage, buildings insurance and maintenance costs. And bear in mind that if you lose your tenant you will still have to pay the mortgage.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[PlanningNow]

Thanks Melanie. I guess I need to check and double check everything with the land registry and the solicitors before I go down that route.