Removing name from mortgage

angelpink

Hi, I wondered if anyone could give my husband and I some advice...
About 4 years ago my husband and his Dad decided to take a £50000 mortgage on a house which my father in law owned outright. This was then given to him as payment from my husband for half of the house (this was pre meeting me!). About 2yrs later they re-mortgaged a further £20000 to pay off debts between them etc. In the following years my husband met me, his Dad got sent to prison and we got married! We now live in the house which is now valued at £110000.
What we would really like to do is remove his Dad from the mortgage, sell the house and buy something else for my husband and I.
My first question would be how much is his Dad entitled to? Is it half of the equity which would be £20000 or half of the value of the house £55000??
My second question would be, how do we get him (he is willing) to sign over his half to me with out exchanging money (as i said before he is in prison). We would then make a personal contract between us for the amount of money we owe him for when he gets out. Basically we just need to know where we stand legally. If anyone could shed some light that would be very appreciated. Thank you.

Ian_W

To answer your first question - your FIL would be entitled to half the equity, the mortgage still has to be paid off and notionally he owes half of it - it doesn't quite work like that but you can't be expected to pay him his "share" of a debt he owes with his son.

The difficulty with him signing the property over to you is that he can't do that whilst he and his son have a joint mortgage on it. Assuming you and your husband could get a joint mortgage for £70K (can you?) then it should be possible with your new mortgage effectively being used to redeem the existing one.

What might be easier, as you want to get your own place, is for your husband and his father to sell the current house - I don't know of any reason why your FIL being in prison should stop this - you two then buy somewhere together with your own mortgage and your half of the equity.

Mrs_Bumble

The most straightforward way would be as Ian W says above, sell the property, split the equity and move on.

Any other route although possible is going to be lots of paperwork and cost extra in additional solicitor costs etc.

If the end result is to to sell, split the equity and you and husband get a new property just sell.

Trying_to_be_good

From your original post, it sounds as if your FIL owned the whole house.

Your now husband needed £50k to buy half of it, so took out a mortgage on the property for that amount, albeit in joint names?

The further advance of £20k was to split fairly equally?

My reading of this is that the £50k mortgage should NOT be set off against your FIL's equity (as in reality it was for your husband to buy into the house), but the £20k should be, so:

£110k for the house, less £20k loan leaves £90k equity, your FIL's share is £45k - as you FIL has only received the £50k from your husband, up until now.

That all assumes he doesn't want to 'give' you/your husband a share of the house.

Ian_W

Trying_to_be_good wrote: »

My reading of this is that the £50k mortgage should NOT be set off against your FIL's equity (as in reality it was for your husband to buy into the house), but the £20k should be, so:

£110k for the house, less £20k loan leaves £90k equity, your FIL's share is £45k - as you FIL has only received the £50k from your husband, up until now.

Can you explain that again, s-l-o-w-l-y please, cos I can't make head nor tail of what you mean?

My reading is that FIL received £50K when the mortgage was taken out, so son owns 50% of house. House sells for £110K, mortgage of 70K is repaid leaving £40K (less exes of course) split in 2 as they are joint owners.

Mrs_Bumble

This is getting all a bit murky I think.

As to the financial side of things, the father owned the property outright, but he then needed the son to go onto a mortgage to raise capital (£50K) and if I read it correctly they both cleared debts with this money.

Then a further £20K was raised to clear further debt between them.

So I guess the question should be how much debt was cleared by both parties.
What formal agreement did the father have with the son for going onto the property originally.

Who has in reality maintained the mortgage, as I assume the father hasn't because he has been in prison.

What equity is the father happy with giving?

Then when you have all agreed on that

The simplest way is to simply sell the house as per the previous posts.