shared mortgage advice

frankie1star

I am seeking advice for my daughter's bf.

In order to get a mortgage (as he had one declined in his own name) his father went onto the mortgage, but did not pay anything.

His father died recently, and now bf has been informed he has to re-apply for the mortgage in his name. Is this a formality, or is he likely to have the mortgage declined. He has to pay an admin charge. I am afraid the details are very sketchy, he doesnt know she has asked me.

Its a very worrying time for the young man, having recently lost his father but now this on top.

Can anyone assist?

frankie1star

anyone help?

Senior_Paper_Monitor

First question - who has "informed he has to re-apply for the mortgage in his name" ?

frankie1star

I believe it must be his mortgage provider Halifax!

Conrad

They need to test if his salary can reasonably cover the debt, for example; 4 x income should equal the sum borrowed.

The fact he is already apying it will be neither here nor there.

Classic case of Labour regulation causing problems for people, but lenders have no choice but to do this affordability test.

frankie1star

So could he lose his house?

I thought it might be a formality, his father didnt contribute to the monthly mortgage repayments.

Leon_W

I don't think that's right Conrad.

When a joint account holder dies then the account continues as before but just with the single name on it. This goes for bank accounts and mortgage accounts as far as I am aware as joint account holders are always "severally liable".

Complications could arise if father made a will and left his portion to A N Other, and in situations such as above I think that I would have been pretty forceful about having suitable life cover in place, but that may not have been possible for health reasons etc.

Personally I think Halifax should just be asking for a death certificate to remove his father from the mortgage, and as far as I can see, they can't re-underwrite it.

PS. Just as an addition. Mortgages are underwritten at APPLICATION so it is out of the hands of the lenders what happens after that. If we all had to maintain a 4X income rule at all times then I daresay most of us (sans credit crunch) would all be out on our ears !

Senior_Paper_Monitor

I have to make some assumptions here (i.e joint tenancy - rather than tenancy in common - and no clauses in wills/trusts which enforce the sale or release of funds to the father's estate).

The mortgage company will not (cannot I am told by our Network) 'call in' the mortgage because of the death provided the due payments are being met - and if the son has been paying the whole thing so far presumably he can continue to do so - the end of deal rates for the forseeable future are probably not a problem even if that occurs. The only 'affordability' or 'suitability' consideration will be if/when the son tries to remortgage.

Sorry to presume to contradict the qualified adviser above (but am in the middle of researching an advice package for a similar but more complicated case and associated issues and have double checked this with our network research department earleir today and a couple of lenders since reading the above comment - but not Halifax as they are on the "don't even try phoning them list").

It really is the same as 'losing you job' - your circumstances have changed and you would not pass a new application but provided you keep the payments up you keep your mortgage/house - there are thousands of people out there who can't qualify for a new mortage, they simply stay with the old one as long as they can afford it.

frankie1star

I dont think the deeds are in the father's name I think it was merely a paperwork exercise to get the son the mortgage(he did not live there either). I know the son is meeting the mortgage payments on the house, and is not dependant on the outcome of the will

Senior_Paper_Monitor

If father is on the mortgage as other than a guarantor then he will be 'on the deeds' - the issue is whether ownership was joint tenancy (they both own all the property) or tenants in common (where they each own a defined part/percentage). In either case it may still be OK for the son, but in the latter it is more likely that a forced sale would occur, unless some form of appropriate 'lifetime interest' was established.

The son needs to take some suitably qualified advice (with the docs available) before he sits down with 'the friendly Halifax' - who, in practice, he may not have to sit down with at all!