Transfer of equity? Advice please.

SteveLAW58

Here's my situation:

Myself and my girlfriend bought our first house last year. We have a joint mortgage, both our names are on it. We've just completed our first year. All the mortgage payments have been made by myself from my personal account, as have the majority (90%+) of the bills. Last week, we split up. She has moved back to her parents, we havent yet discussed what we will do with the house. My preference is that I continue to pay the mortgage and live in the house, financially I can afford it. She leaving doesn't effect me significantly in a financial aspect. I don't think she will have a problem with that, although she feels she is walking away after 4 years with nothing to show for it.

Right, I've got a few questions!...

How do I stand legally/with the lender with running the mortgage on my own?
Could I experience problems taking her name off it?
What impact will it have on me and on her?
Will I occur costs?

I've been told about a transfer of equity document, is this correct? What does this entail/require?

Thanks for your help in advance.

inca_2

Ok...first of all her saying she would be walking away with nothing after 4 years is unfair as you have only had the house a year if I am right? Secondly, did she put any deposit into the house?

If you are not borrowing any extra and your income fits the mortgage requirement you should be fine. However if it doesn't and you can prove with bank statements etc that you have been paying the mortgage and bills etc yourself that will help your case a lot, depending on whether you are regularly overdrawn at the end of it or not (although with some lenders if you are not over or up to your authorised limit it may not be as big a deal).

You should be able to keep the same product as you have now and just remove her name, it may well set up a new mortgage account though and any fees will depend on the lender you are with. There will be legal fees but in my experience they don't tend to be big and are fairly standard across the board.

You could have problems depending on whether she contests that she is owed some of the equity or any deposit she paid, how much equity is in the property? Has she contributed at all? do you have children together?

As for the impact on you and her I apologise but I'm not really sure what you mean by that?

My best advice is to call your lender and (if they have branches and it's convenient to you) make an appointment to go in and sit down and talk to an advisor. Take bank statements and pay slips so that you can show them any evidence they require upfront, it's easier this way in the long run. You could also take someone with you if there is anyone that you feel comfortable enough to do this with so that they can take any notes or remember things that you may not. I often find that as they are not so involved they tend to take in more. Good luck!

walshc

I am just in the process of a transfer of equity myself (I bought the house with a friend, and now I am buying her out). Here are the costs:

Was on a joint mortgage with Scottish Widows- I have to pay £100 transfer of equity fee. They will not allow me to continue my current mortgage product as it requires a new mortgage account in my own name (although they initially said that I could keep the same mortgage product). This is costing me an extra £100 a month given the rise in interest rates. Scottish Widows have even been out to do a property valuation, even though we only remortgaged last year (but they are paying for this, not me). As I am effectively redeeming my mortgage I am also paying the £195 redemption penalty.

I am paying approx £300 to the solicitors for searches, deeds etc. As the property value that I am buying (i.e. my share) is below the stamp duty threshold I do not have to pay stamp duty.

So...upfront costs = £300 to solicitors, £295 to Scottish Widows

silvercar

As well as looking at the mortgage, you should also look at the property value. If the property has increased in value since purchase, the partner leaving the joint ownership may be entitled to a share of that profit. Similarly, a fall in value may need to be compensated - the person walking away is leaving a deprecieating asset.

eg. property bought for £150k 5 years ago now worth £200k. Say deposit paid jointly for £20k, mortgage £130k. Now there is £70k equity. All other things being equal, the leaving partner may feel entitled to £35k. So the remaining partner may need to increase mortgage to £165k to retain the property.

eg2. Property bought for £200k last year, now worth £160k (though £150k for a quick sale). If the mortgage was £170k there was 30k invested but now there is negative equity. The remaining partner could want the loss shared or will be left with a mortgage higher than the property. In this situation a lender may not agree to one party taking on the mortgage as a revaluation will show that the mortgage is higher than the lenders current lending criteria. In order to walk away, the leaving partner may need to pay off the partner staying, or remain on the mortgage.

SteveLAW58

Secondly, did she put any deposit into the house?

No, the deposit was paid by myself and a cash gift from my parents.

You could have problems depending on whether she contests that she is owed some of the equity or any deposit she paid, how much equity is in the property? Has she contributed at all? do you have children together?

I can't see her contesting this, as theres no equtiy in the property, weve only had it a year and she did not pay for any deposit, although she contributed to the legal fees in the process. No children.

walschc - Are you now paying a higher rate mortgage each month?

SteveLAW58

The mortgage is with Bristol & West, if that helps at all.

walshc

SteveLAW58 wrote: »

walschc - Are you now paying a higher rate mortgage each month?

Yes- I am about £100 a month extra

inca_2

So it looks as though you won't be wanting to borrow any extra money which will work in your favour. Give your lender a call and ask them what their procedure is, things to ask would be do they set the mortgage up as a new account? can you keep the product you're on and what fees will they charge you?

Dot2010

Brief situation. My husband and I own a small cottage outright. No mortgage. It is a second home which we have been transferring to our three sons for the last 4 years. The Transfer of Equity will be completed in 2013. We know we cannot "benefit " thereafter from use the cottage after the Deeds have been transferred to our sons.

Does the whole 7 yr process of transfer become null and void if we delay the implementation? ie We do not transfer the Deeds at the time of completion of ToE in 2013 but continue to use it as long as we are fit to travel?

Grateful for any clarification.