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monkey
Starting Member
15 Posts |
 Posted - 12 November 2008 : 15:26:16
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| Is my house an investment? Hello. I bought a house on an ordinary residential mortgage, but rented it out since I am doing a contract job in London. My situation is a little unusual in that whilst in London I live on a narrowboat which I bought with an unsecured loan. My house has little equity in it so I thought if I went bankrupt I could get my share bought out quite cheaply. However, it has been suggested that since I don't live in the house and rent it out that it will be classed as an investment and as such will have some nasty bankruptcy order put on it that will take any equity whenever it is sold - even many years time. Does anyone have any thoughts as to how likely it is that this house will be viewed as an investment and if so, what are my best strategies to protect it? We DO intend to move back to it when my work in London finishes. Thanks. |
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John
New Member
United Kingdom
73 Posts |
Posted - 12 November 2008 : 20:33:10
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Hi
yes the property is indeed an investment property. Moreover the OR would almost certainly bring the matter to the attention of your lender who will have issues with the fact that you are currently enjoying a residential mortgage interest rate when the property should have a buy to let mortgage.
One way around this is to declare bankruptcy when you can move back into the property (once current AST has lapsed) which will put the narrowboat at risk.
Or, in the current climate it is not beyond the realms of possibility that the RTLU, once they are handling the bankruptcy case, will allow the purchase of benefical interest at the usual £1 per person plus fees instead of placing a charge on the property for years. You would of course still have the buy to let mortgage issue to resolve.
www.Bankruptcyhelp.org.uk
0800 078 9367 |
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monkey
Starting Member
15 Posts |
Posted - 13 November 2008 : 15:14:31
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Thanks John. When I bought the house it was with the intention of living in it, and I got the bank's written permission before renting it out. It is my only house - not a second property - and that's why they said at the time it was ok to rent it out on a residential mortgage. Does this change anything?
I don't think I'll be able to put off bankruptcy long enough to move back in, since my job doesn't finish until September. My plan was to get someone (wife, parents?) to hopefully be able to buy out my beneficial interest of the boat and house (probably less than 15k total).
Sorry - what's an RTLU?
Thanks. |
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John
New Member
United Kingdom
73 Posts |
Posted - 13 November 2008 : 19:44:12
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Hi
if your wife's parents are in a position to buy your beneficial interest in the narrowboat (50% of value) plus your BI in the house for £1 + legal fees then there's nothing to stop you declaring bankruptcy as soon as you wish.
Once you have the OR office and examiner contact details (you'll get this info days after going BR) get your in laws to write to the examiner dealing with your case stating they are interested in buying your BI in the house and the boat.
When they get around to dealing with these then they will be only too pleased that you have a ready made buyer at hand.
Obviously as you have written permission from your lender to do so, the fact that you are letting your property whilst enjoying a residential mortgage interest rate is not an issue.
Your case would normally be passed to the RTLU once the OR has concluded his investigations. Where there are assets over a certain amount cases can be passed to a private sector trustee, not good as these people charge a lot of money.
If an offer is in place to buy your BI then the OR will pass it to RTLU to sort out the collection of the offered monies.
www.Bankruptcyhelp.org.uk
0800 078 9367 |
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Is my house an investment?
