'transfer of equity'

lukeh23

Hi All,

Myself and my ex partner have come to an amicable agreement for me to buy her out of a property we jointly own together with a joint mortgage. I have since re-married and she is engaged to her new boyfriend. The money will help her starting a new life and provide a home for myself and my wife. We bought originally in the summer of 2006 with a 10% deposit. Since then I had believed the value to have gone up and then came down to the original buying price. I have enough in savings to pay her outright the amount we agreed. I have a solicitor lined up to deal with amendments to deeds and other legal papers.

Yesterday I visited the Halifax PLC (RBS) whom we have a non fixed mortgage with (currently at standard variable rate, previously was fixed for two years). In my naivety I though it would be a case of credit checking me, seeing that I am solvent and can afford the mortgage on my own (I currently pay it by myself as I live at the property with new wife - so no change here anyway) and then moving the mortgage ownership over to me. I have no over debts and I have never defaulted on any payments and have been in secure employment for the past five years so I should look good on the books.


The mortgage advisor informed me that the property was now in negative equity due to the housing market (thanks RBS for using my money wisely!). We paid £188,000, the mortgage was for £177,000 (minus the deposit of 10%) and we have paid off £5,000 + interest. They now have an index value for property of £163,000 (which is quite different to what estate agents are saying (common amount being no change at £188,000)). I was then informed to go ahead with the change I would need to give them £17,000 pounds to cover the negative equity.


Now their is no way that I can get £17,000 together + the money to buy out the ex. So it looks like a show stopper.


I just cannot see the logic in this...why are they not already chasing me for £17,000 as the situation is the same with both joint ownership or single surely? I am currently paying and can afford to with ease. I have no desire to sell for at least ten years. I don't want to re mortgage or borrow any money at all. The property is in Berkshire , 15 minutes from Heathrow in a well sought area so there will be a demand in time.



Is there anything I can do? As I understand it this 'institution' is now 70% owned by the government (tax payers, me and you) . Can I go to my MP (as long as she does not have her own problems to deal with from claming for a second home?).


What can do? I don't think I can go to another lender due to the negative equity. Do I just have to accept this and wait five years whilst messing up plans for my ex and myself.


Hoping you can help. As you can see I am not the most knowledge when it comes to finance which is why I came here, so go easy on me please

opinions4u

Yesterday I visited the Halifax PLC (RBS)

Halifax is owned by Lloyds Banking Group and is nothing to do with RBS.

Is there anything I can do? As I understand it this 'institution' is now 70% owned by the government (tax payers, me and you) . Can I go to my MP (as long as she does not have her own problems to deal with from claming for a second home?).

LBG is 43% owned by UK Financial Investments (HM Government). Your MP will not be able to change their lending policy.

I just cannot see the logic in this...why are they not already chasing me for £17,000 as the situation is the same with both joint ownership or single surely?

If you don't pay they can pursue your ex. If she's removed from the commitment they can't. It's as simple as that.

I have no desire to sell for at least ten years

Neither do they. They are less likely to have to repossess if they can chase your ex for payment.

I don't want to re mortgage or borrow any money at all.

No, but you do want to increase the risk of them losing money by reducing the number of people liable for the debt.

Do I just have to accept this and wait five years whilst messing up plans for my ex and myself.

It's looking like that. Or save up £17k.

Sorry.

lukeh23

You sound like you must work for them judging by the helpful tone.

opinions4u

lukeh23 wrote: »

You sound like you must work for them judging by the helpful tone.

I used to be a branch manager. Great fun, but life moves onwards and upwards.

I'm sorry if you consider the tone unhelpful. I've tried to explain why their security would be reduced if they agreed to do what you want to do.

I could empathise and say how awful it is and how they should be much nicer in the circumstances. But it wouldn't change anything would it? I'd rather deal in facts and views around the facts than engage in a pointless love in.

Had there been some sort of error in what you'd been told, or I felt there was a way around the situation I'd have posted that. I can't see an error or identify a likely way around it - other than reducing the debt.

Royal Bank of Scotland and Bank of Scotland are different entities.

beecher

lukeh23 wrote: »

You sound like you must work for them judging by the helpful tone.

Everything stated in that post is correct. Your property is very unlikely to be worth what it was in 2006 - Estate Agents will tell you an inflated figure. If you are confident that the valuation is inaccurate then pay for a new valuation.

One other point - surely if the house is in negative equity then this means your ex is not entitled to any money from you? In fact she's liable for half of the negative equity and should be paying you money.

mustang1

beecher wrote: »

Everything stated in that post is correct. Your property is very unlikely to be worth what it was in 2006 - Estate Agents will tell you an inflated figure. If you are confident that the valuation is inaccurate then pay for a new valuation.

One other point - surely if the house is in negative equity then this means your ex is not entitled to any money from you? In fact she's liable for half of the negative equity and should be paying you money.[/QUOTE]

Precisely - you say you planned to "buy her out" but really she should be paying you £8.5k and you can put in the other £8.5k.

I appreciate you want a clean break but I would be more worried if I was your ex with you still living in the house as it's unlikely she'll be able to get a mortgage to buy anywhere else.

lukeh23

She does not live with me and the amount to be paid to her is quite small. Here is how it was worked out....

Eventually the market will go up I hope and expect.. however neither of us want to buy the other out based on the current price of property.

So I agreed to give her a small sum and her original deposit. This would then leave me to live in the property with a long term view of having some leverage for the future once the market goes back up.

This is not a buy out based on the present value - its a compromise as I am willing to wait it out for the damage done to be recovered.

beecher

lukeh23 wrote: »

I get the message guys - I have been well and truly shafted by the banking system. Thanks for your time and input.

Good luck sorting out the negative equity - to keep things in perspective do note that Halifax are one of the few banks who give new deals to people in negative equity. Other banks would be asking for 90% LTV so would be looking for you to pay more than £25,000 in order to get a new deal

beecher

lukeh23 wrote: »

This is a buy out based on the present value - its a compromise as I am willing to wait it out.

Just be sure you're basing this on the real value which is likely to be closer to £163,000 than £180,000. The deposit's gone now so shouldn't be given back, unless you're really very generous. I don't think you can afford to be generous given that you're stuck on the SVR with no chance of getting a new deal - I urge you to get professional advice on this as you risk being stuck on an ever increasing SVR and with no leverage at all.

lukeh23

beecher wrote: »

Just be sure you're basing this on the real value which is likely to be closer to £163,000 than £180,000. The deposit's gone now so shouldn't be given back, unless you're really very generous. I don't think you can afford to be generous given that you're stuck on the SVR with no chance of getting a new deal - I urge you to get professional advice on this as you risk being stuck on an ever increasing SVR and with no leverage at all.

Thanks...I will do that - but who should I go to without being charged (or at least a reasonable amount?)

beecher

lukeh23 wrote: »

Thanks...I will do that - but who should I go to without being charged (or at least a reasonable amount?)

I'm not sure - maybe the solicitor you have already dealt with?