secured loans

petunia100

Does anyone know what happens to loans secured on a house if the house is sold or if one person leaves the house and no longer pays the mortgage?
Thanks.
,

Premier_2

When a house is sold, the secured loan is repaid before the owner gets to see any money that's left.

If the mortgage doesn't get paid, ultimately the house will probably get repossessed and sold.

If there's not enough to pay off the mortgage & secured loan, the lenders will still pursue the original borrower for the balance of debt.

petunia100

Premier wrote: »

When a house is sold, the secured loan is repaid before the owner gets to see any money that's left.

If the mortgage doesn't get paid, ultimately the house will probably get repossessed and sold.

If there's not enough to pay off the mortgage & secured loan, the lenders will still pursue the original borrower for the balance of debt.

Thanks for your reply.
If a couple separate do you know what happens to a secured loan if one of them is staying in the property. As the property would then only be in one name but is secured against the property could the name be removed from the loan?

rover25

So you couldn't take out a secured loan to have in place to cover shortfall of negative equity when you sell house. An unsecured would be the way to go here?

Premier_2

petunia100 wrote: »

Thanks for your reply.
If a couple separate do you know what happens to a secured loan if one of them is staying in the property. As the property would then only be in one name but is secured against the property could the name be removed from the loan?

You'd probably need the agreement of both lenders (the mortgage company & the lender with the second charge) before you could change the property into one named owner.

Usually when a jointly owned property is changes into the hands of just one, it also involves a financial balancing settlement. The lender would want probably want to know what that was and why it wasn't used to settle the outstanding debt. Depending on the agreement with the lender, the terms of that settlement might include the transfer of the debt to the proposed sole owner. (but at the moment they have two people to chase, then they'd only have one, so, all things being equal, halves their chances of getting it back, so why would they agree?)

There's nothing to prevent two people remaining the named joint owners of a property, yet only one party only actually lives there.

Bottom line - there's no way to remove the charge from the property other than by re-paying the lender. That's why its called a secured loan; it's secured against the property.

Debt_Free_Chick

petunia100 wrote: »

Thanks for your reply.
If a couple separate do you know what happens to a secured loan if one of them is staying in the property. As the property would then only be in one name but is secured against the property could the name be removed from the loan?

It's not that simple.

When a couple separate, one staying in the property does not result in the property being in only one name. You continue to own the property jointly until one buys out the other or the property is sold.

The secured loan is treated in exactly the same way as the mortgage - you are both liable for it until it is settled, either by paying it off or by selling the property, or by one party buying out the other. Then, the sale proceeds settle the mortgage and the secured loan.

You cannot "remove" a party from a loan. The existing loan has to be paid off and, if necessary, replaced by another loan.

Can you give us more details? If you post full details of the exact situation, we can be more specific with our suggestions.

neverdespairgirl

petunia100 wrote: »

Thanks for your reply.
If a couple separate do you know what happens to a secured loan if one of them is staying in the property. As the property would then only be in one name but is secured against the property could the name be removed from the loan?

The property would only be in one name if the lenders (mortgage and secure loans lot) agreed to it.

petunia100

After a trial seperation my husband and I have decided to separate. I own 3/4 of the property and would like to take over the mortgage of £30,000 on a property worth approx 230,000.

However as I do not work at the moment (we have young children) I am having trouble getting the mortgage. So I was wondering that if we took out a secured loan on the property (been unable to get unsecured loans) paid off the mortgage and then transferred the house into my name alone.As the loan would still be sucured on the house I was hoping that this may be a way round it.
Any ideas if this would work.

Richard_Webster

I'm not a divorce ;lawyer but my understanding is that it is possible for a charge to be put on the property in the husband's favour so he gets his share when the property is sold, the youngest child finishes full time education, or the wife cohabits with someone else. When the first of these happens the proportion has to be repaid but until then husband has to wait.

In practice the wife does at least have a chance of working once the children are no longer dependent on her and so could either get a mortgage or sell up and go down marke tin ordere to pay out the 25% or whtever to the ex-husband.

petunia100

Richard_Webster wrote: »

I'm not a divorce ;lawyer but my understanding is that it is possible for a charge to be put on the property in the husband's favour so he gets his share when the property is sold, the youngest child finishes full time education, or the wife cohabits with someone else. When the first of these happens the proportion has to be repaid but until then husband has to wait.

In practice the wife does at least have a chance of working once the children are no longer dependent on her and so could either get a mortgage or sell up and go down marke tin ordere to pay out the 25% or whtever to the ex-husband.

Thanks for your reply.
My ex does not want to be paid out as he only owns 25% anyway and he'd rather the kids had a better place to live. But I want to take over the morgage if posible, because then I'd feel more secure.

petunia100

can anyone tell me if this would work ?