Transfer of Equity

Natty1_2 · 27 February 2008 at 1:07PM

Hi

When my mum got married later in life, to save the house (so to speak), my mother put me on the mortgage deeds so that the house would be protected in the event that should something happen to her, I would get the huose and not my step-dad.
Now that I am ready to look for a house of my own, it seems that I am still technicallly liable for the mortgage on the family home even though I do not contribute towards the repayments. We have filled in a transfer of equity form so that my mum can go on the morgage by herself and leave me free to buy but the lender is saying that we would need to pay £35,000 if my mother wants to be on the house by herself.
I am really at a loss as it seems that all the lenders say the same thing and I am getting rather frustrated and upset that I am, in effect tied to the family home and I will never get a place of my own. Does anyone know how I can get around this?

homer_j_3 · 27 February 2008 at 2:38PM

Well effectively the bank are saying that your mums income cannot support the debt in their eyes. Currently they have 2 people to chase for the debt and they do not want to risk their security.

If the lender will not agree then there is nothing that can be said or done to change this fact. If you have searched other lenders with a view for your mum to remortgage in her own name and have come up with the fact that no one will consider this option then you are committed to this mortgage.

Just to provide clarity to the position and to see if there is anything you have missed, could you provide

- Mums property value
- Mums Mortgage Amount
- Mums gross annual income
- Mums Age
- Confirmation of whether Mum has private or work pensions in retirement

Natty1_2 · 27 February 2008 at 3:05PM

Thank you for your reply homer_j. This is the problem, the Banks are not seeing the woods for the trees.
In answer to your questions

Value of Property = £675,000
Mum's mortgage outstanding = around £90,000
Mum's gross income = £21,000
Mum's age = 53 years old

My mother has 3 work pensions in total. One pension she is claiming now which amountd to around £100 per week.

I always thought that once the Banks knew the value of the house, they know that they can get the value of the house and some should she ever default on payments (which I hasten to add, she has never done)

homer_j_3 · 27 February 2008 at 3:07PM

Is the £100 a week from the pension inclusive of the 21k?

Is your mum tied in to her current deal?

Natty1_2 · 27 February 2008 at 3:09PM

No the pension is exclusive of the her salary of £21K. She is not tied into any product at current.

homer_j_3 · 27 February 2008 at 3:27PM

My view is that your mum would be looking at a 4.3x salary on 21k and with the extre £5200 pension income, this brings it down to 3.46 x salary.

I cannot for the earth of me see why your mum could not remortgage in her own right. Clearly there is not enough information to say for certain where your mum would need to go but it should be feasible.

Has she sought professional advice or looked at other lenders?

Natty1_2 · 27 February 2008 at 3:37PM

Exactly. This is the whole point that we seem to be frustrated with. Well our Lendsers are Alliance & Leicester. My mother has just spoken to someone at A & L who said appeal the decision and send in evidence as normally when the bank sees initial requets it is just done generally. So will see what happens. We also approached Halifax (who we generally bank with) and spoke to a Financial Advisor, They said they could allow my mum on her own, however, when they did the breakdown of the terms of the mortgage, we could end up paying an extra £40K although she did say it was an 'over exaggeration' but all lenders need to show what could possibly happen?!?!??!??!

homer_j_3 · 27 February 2008 at 3:39PM

[QUOTE=Natty1;8949231We_also_approached_Halifax_(who_we_generally_bank_with)_and_spoke_to_a_Financial_Advisor,__They_said_they_could_allow_my_mum_on_her_own,_however,_when_they_did_the_breakdown_of_the_terms_of_the_mortgage,_we_could_end_up_paying_an_extra_£40K_although_she_did_say_it_was_an_'over_exaggeration'_but_all_lenders_need_to_show_what_could_possibly_happen?!?!??!??![/QUOTE]

Could you explain this to me again please?

Natty1_2 · 27 February 2008 at 4:44PM

When we had the meeting with Haxlifax, they printed off the breakdown off the mortgage. Similar to a mortgage in principle but it was just a breakdown. When we looked over the paper work when we got home, we noticed that the extra that we would have to pay onto of the oustanding mortgage would be £40K.
When I emailed the financial adviser at Halifax about the etra £40K she said that this figure was a guide to how much potentially we would pay back if we keep the mortgage for the term we have selected. so she said it's an over exaggeration, but all lenders have to show this section in the illustrations. So it shows for every pound borrowed how much you pay back.

homer_j_3 · 27 February 2008 at 5:15PM

Oh Ok, so what you are saying is that you have literally costed the current monthly repayment and multiplied that by the term left on current mortgage and then compared it to the total amount payable with the halifax?

Well, I would always say that its important to look at the overall cost but it is generally accepted that you would try and avoid the standard variable rate through remortgaging. However, that said, without looking at all the information in details, it is difficult to tell you anything else.

You want out of the mortgage to get your own place. So if A&L decline you the TOE, the only options available are:

Remortgage elsewhere or borrow further to see if you can use the equity to buy your house and have that mortgage free. You then just pay the additional amount to your mum. If you could do this, you may have tax implications to consider so seek professional advice.

Natty1_2 · 28 February 2008 at 11:45AM

Thank you very much. You have been really helpful:A

Transfer of Equity

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