Is there a way to overcome the financial consequences of a home sale falling through? Darren Polson offers advice to a homeowner in financial difficulty in this week’s Q&A
The question
I have two houses: a mortgaged house where my family and I live, and an owner-occupied house to rent out. We have decided to sell the buy-to-let property as we need to pay off some debts. The process went quite well until the buyer backed out at the eleventh hour.
We are now back to square one and looking at the prospect of having to put the property back on the market and going through months transfer. We urgently need the money we expected to make from the buy-to-let sale as we have some urgent bills to pay.
Can we get a short-term loan as collateral for our house? If so, how quickly can we do this?
Darren’s answer
Thank you for your question and I’m sorry to hear the sale fell through. This can be a frustrating time and I understand why you are exploring alternative options.
There are a number of options regarding additional borrowing.
One specific option is to look at remortgaging the property with additional borrowing to repay your debts and credit obligations as you have outlined. This depends on the lender’s criteria for the amount and term based on your age and circumstances.
Additionally, the amount you can release from the home will be based on the total loan-to-value, which is the value of your home and the outstanding mortgage balance.
Please note that many lenders will use the rental income from the property to determine the maximum amount affordable, this often does not take into account your salary or personal expenses.
This may be beneficial for you, because the same affordability calculations do not apply as for a home mortgage.
We recommend that you speak to a mortgage broker who specializes in buy-to-let mortgages and who can guide you through the process. They can assess your rental yield, affordability and loan value and look at the amount you can get as an additional loan.
Copyright David Johnstone Photography
Meet our expert…
Darren Polson is head of mortgage operations at Aberdein Considine. He has been writing a regular column for Welke Hypotheek for over two years and is now here to answer YOUR questions.
If you have a question for Darren, please email [email protected] or leave a message in the comments below.