• Selling A Flat And Providing The Mortgage - What Contract

    By Guest on 16th Feb 2017

    We have flat that we were selling to the tenants with the expectation that they were getting a mortgage. Now we learn that they cannot get one - bad credit score and too old for a lengthy mortgage. They have a reasonable income and we trust them. They really do want to buy the flat as they have lived there for 8 years and regard it as home. We think that we can sell it to them over a six year period of repayment. What particular provisions do we have to make ?

  • 1 Answers

    By Guest on 16/02/2017

    You should probably secure a charge on the property. For example say you agree a sale price of £100,000 and they can pay you £20,000 now. You provide them with a mortgage for the remaining £80,000. You agree an interest rate (if you want to charge interest) and a repayment schedule and you put all the agreed terms in a deed which is then registered against the property title as a legal charge (a mortgage). You transfer the legal title now rather than in six years. When the mortgage is paid off you can remove it by signing a form DS1 and the buyers will then own the property outright.

    The process is straightforward but the drafting of the actual legal charge can be complicated and you should instruct a solicitor to draft it. Your buyer should instruct a solicitor to both check the title and searches etc and to approve the legal charge.

    Even if you don't think you need to worry about your buyers defaulting, a lot can happen in six years and you need to ensure that the debt owed to you has priority over any other claims on the equity in the property. You could fall out, they could die and relatives might challenge your claim or they could get into debt and othert creditors could look to claim priority.

  • Post Your Answer


  • Do you want to be informed of further comments / replies? Yes No

Ask a Question

Search