Beneficial Interest

[Sensible77]

Could someone explain what is meant by beneficial interest? I understand that if you go bankrupt, someone else can buy out the beneficial interest in the house so that you can continue to live in it. Is the beneficial interest the amount of the equity in the house?

For example if a house has a joint mortgage with £20,000 equity, the person going bankrupt has to pay their half of the equity, £10000, to the OR and the other mortgagee gets the other £10,000. If the other mortgagee can raise £10,000 then the house does not need to be sold to a third party. Does this simply mean that the mortgage is transferred from two people to one, provided that the other person can maintain the mortgage payments?

[Sadsack]

Hi Sensible

In effect "Yes".

Sue

Ho Hum! Think I'll bang my drum!

Read My Blog
http://sadsack.blogs.iva.co.uk/

[Lisa2009]

heres a question
What if the other person on the mortgage does not work,can the bankrupt persons income be used when calcuating a remortgage that would transfer the beneficial interest over to the none bankrupt person?

[Lisa2009]

No particular reason, just curious

[MelanieGiles]

Potentially yes - but you would be better waiting until you are discharged from bankruptcy as you will find it difficult to secure a loan whilst this is still on your record.

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

[Lisa2009]

so if affordable, there would be a chance the home could be saved?

[MelanieGiles]

Yes - so long as you were able to raise sufficient money for the beneficial interest portion to be paid over to the Trustee.

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

[whichwaynow]

So if your equity was say £50000 and a member of the family was able to raise it. They could buy your share and as long as you kept on paying your exsisting mortgage you could keep the house. Or do they have to buy your whole half of the equity including the mortgage ?

[Sadsack]

Hi

As far as I understand it, only your half of the equity ---- equity £50k and its joint therefore £25k - if only your mortgage - the full amount and you maintain mortgage payments.

Sue

Ho Hum! Think I'll bang my drum!

Read My Blog
http://sadsack.blogs.iva.co.uk/

[Sensible77]

This is what I dont't understand. Even though you are bankrupt, you can still continue with the mortgage?

[guiness]

This is very interesting as I am in a similar position. Our joint equity is about 18k, I am the one thinking of bankruptcy and I am the only one who works. My understanding is my husband will have to find 9k to buy out my equity but how can he get this if he doesn't work. Can you not just add it on to your mortgage? Plus if you have a 90% mortgage loan is your equity not actually less?

[MelanieGiles]

It can be remortgaged, but not until you receive your discharge from bankruptcy.

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

[Sensible77]

I’m really confused by this! So, as in my example, if the other mortgagee could get hold of £10,000, but not by remortage, would the OR be happy with this? Would the mortgage provider be told this and would they be OK as long as the mortgage continued to be paid?

[Sadsack]

If you have someone who will purchase the beneficial interest - ie your share in the equity, your trustee will accept this (being that it be fair). You would have to get authority from your mortgage lender to do this. If you have not missed any mortgage payments, your mortgage lender has more to lose by saying no than he has by leaving you in the property and for you to continue to pay the mortgage. By purchasing the beneficial interest and both your lender and Trustee agree, legal fees also have to be paid.

Sue

Ho Hum! Think I'll bang my drum!

Read My Blog
http://sadsack.blogs.iva.co.uk/

[Sensible77]

Thanks, Sadsack. I understand now.