Name On Mortgage

PeterJames123

Hi,

My wife's parents want to apply for a mortgage which they simply can't afford. They however believe they can and are going to do additional things to help pay for it, they have asked her to place her name on the mortgage so the bank will then give them what they are looking for. I feel this is morally wrong but they are convinced the banks are wrong and they can afford it. Is there anything illegal about my wife also placing her name on the mortgage, even though she will not be living there and she will not be contributing towards the payments? We are both consistently fighting over this topic and I would like to know what the legal repercussions could be.

Cat695

you do realise that if the worst happens then she would also be liable for monies owed......

sorry does SHE realise

PeterJames123

Cat695 wrote: »

you do realise that if the worst happens then she would also be liable for monies owed......

sorry does SHE realise

So basically if they are unable to pay the mortgage what exactly would happen to her?

plumtreebabe

Hi there, what you seem to be describing is your wife's parents asking her to be a guarantor - that means that if they default the bank will go to your wife for the money. Now I've heard of Parents acting as guarantors for their child, but not the other way round, but nowadays financial situation is more volatile.

Anyone can act as a guarantor for anyone else on a mortgage, (I think) so long as they can prove that they have the finances to pay up if the mortgagees default.

This is going to be a trcky act of trust between your wife and her parents: does your wife truly believe her parents can pay the mortgage, and if she does can she prove to the bank that she could pay it if they defaulted?

Personally I would not do it unless I could afford to cover their mortgage without it affecting my own personal finances. My personal feelings are that they shouldn't be asking this of your wife, and that she should turn them down.

If they are not asking her to act as guarantor but to be included on the title deeds as buying/owning a third of the house then this is something else. If they came to sell the house then she would be liable for capital gains tax (only if the price went up ha ha). You would need to consider the financial implications of the death of either or both of her parents, and the ownership of the house and any other members of the family who would also benefit (brother or sister).

I don't think the law takes any notice of who payed what if there are two or three names on the deeds; it would just be considered as joint ownership.

Please don't take what I've said as given, I'm just an enthusiastic amateur, but I hope it gives you some idea of the possible problems. It is really hard to deal with family and friends who want financial help, and even harder to say no without destroying relationships. I wish you both a successful outcome.

Cat695

The Bank/Mortgage company don't care where the money comes from or who lives in the house etc and if they cannot pay they will come after ALL involved.....

the only reason why i know this is because a family member and her now ex are in a BIG battle over who should pay for the house (neither live in it) yet the mortage company quite politly told them, they don't care! if either one doesn't pay then they will have them both for not paying....whoevers name is on the mortgage is liable for it....simple as that!

Hence why normally young people get parents to come onto mortgage so if all goes wrong parents can bail them out and not lose the house.....if they cannot pay (Parents) they will come after your OH.....is she on your mortgage to?

Again worst case here.....debt collectors knocking on your door!

I personally would NOT!! let her do it if you are sure that they really can't afford the mortgage......do they actually know what is happening with the housing market at the moment....they would be pretty stupid to buy now especiialy if its a LARGE mortgage they are getting. MAD MAD i tell you

inaspin_3

I'm not sure on whether it is illegal, but if the bank won't lend to just them then if it were me I would be worried about putting my name on the mortgage. If they are going to do other things to help pay for it will they be able to keep to it for the term of the mortgage? Circumstances change.. If they can't keep up with the things that help pay for it, your wife would be legally responsibe to pay. I can understand why she would want to as it's her parents, but would she be able to pay for the mortgage if her parents couldn't? I know i've pointed out the 'what ifs' and the negatives, but it is a very big responsibility. Good luck!

PeterJames123

Hi,

Thanks for your swift replies guys, after speaking to them the scenario is as follows. Her parents can not get the mortgage so they are asking for my wife to go 50/50 with a close family member for one year. After that year they want my wife to sign over her half to her parents. Is this even possible considering they are not aloud to get the mortgage in the first place?

CLAPTON

the mortgage must be in the names of all the owners of the house
the house must be owned by the names on the mortgage

are her parents planning to give the house to her and the 'close' family member... it will be theirs then (subject to the mortgage of course)

As she and the other aren't living there, they will probably need a BTL mortgage.

Does she and the other have sufficient income to get a sufficient mortgage?


she and the other will be fully responsible for paying the mortgage...
does she already own a porperty with you ?.. if so that will be a risk too.

stamp duty will need to be paid plus relevant solicitors fees and mortgage fees.

after a year, if she and the other person are willing to reliquish their ownership of the property, then the new owners (i.e. parents) will be to get a mortgage for the appropriate amount.

Solicitors fees and stamp duty will need to be paid.

Without knowing the full financial details its not really possible to give good advice but it doesn't seem very sensible .

PeterJames123

CLAPTON wrote: »

the mortgage must be in the names of all the owners of the house
the house must be owned by the names on the mortgage

are her parents planning to give the house to her and the 'close' family member... it will be theirs then (subject to the mortgage of course)

As she and the other aren't living there, they will probably need a BTL mortgage.

Does she and the other have sufficient income to get a sufficient mortgage?


she and the other will be fully responsible for paying the mortgage...
does she already own a porperty with you ?.. if so that will be a risk too.

stamp duty will need to be paid plus relevant solicitors fees and mortgage fees.

after a year, if she and the other person are willing to reliquish their ownership of the property, then the new owners (i.e. parents) will be to get a mortgage for the appropriate amount.

Solicitors fees and stamp duty will need to be paid.

Without knowing the full financial details its not really possible to give good advice but it doesn't seem very sensible .

There plan is this

To buy a house for 185k, they are unable to get that much so my wife and family friend are going to put the names down instead. Her Parents will then live in that house and pay the mortgage, after 1 year they would like my wife and the family friend to simply sign over all deeds to them. My wife and I live at my parents so do not have any mortgage together. We don't intend on moving out for another 2 years. Her parents have basically said that they are 100% sure then can pay the mortgage and would never put their daughter in any trouble.

Cat695

For a start you cannot "sign over a mortgage" whoever gets the mortgage it is theirs until....they pay it off.... or Die! you CANNOT sign it over!! FACT if the parents wanted the house they would then have to get a mortgage......or pay for it outright FACT

So from what your saying they want your wife and Close friend to get a mortgage on a house.....the parents live in it and pay your wife/close friend the mortgage? (this is illegal if they don't tell the Bank that they are letting the house out which is what they are doing) and are committing Fraud

So what does your wife do if they don't pay?? kick them out and rent the house out? can she and close friend afford the mortgage if parents don't pay??

is close friend of parents your close friend?

I understand your wife is wanting to help your parents but she could be putting herself and her family in financial danger if the worst happens.... its as simple as that! unless she/you earn vast amounts of money and can afford two homes (if she rented it out it probably wouldn't cover the mortgage especially in the current housing climate).

She is MAD to do this....but i bet she will still argue its a good idea....why must they have this house now??? can't they wait its probably NOt going to be sold so would be cheaper in a year anyway.......houses have already dropped 10% and are dropping fast (really fast depending where you live). MUGS to buy now with a large mortgage

HeadInSand_2

This is a disaster waiting to happen, how can they sign over the deeds without their own mortgage? If they can't get one now, they sure as hell won't get one in a year's time (when we'll be firmly into recession, the house worth even less and lending has tightened even further, I'm sure your Wife won't want to sell it at a reduced price to them!) - they can't just sign it over, they have to sell it to them in order for a new mortgage to be created and the old one cleared. Plead with her not to do it!