Separation & Negative Equity Mortgage

Annisele

The reason the lender might have an issue if the girlfriend is taken off the loan is that the lender loses the chance to pursue the girlfriend for any payment.

From the lender's perspective, if your brother doesn't pay the mortgage for any reason - from death through unemployment through to him just deciding he can't be bothered with the house any more - they can currently go after the girlfriend for the whole of the shortfall (whether she moves out or not). I appreciate that your brother doesn't plan on doing any of those things, but the negative equity will bother the lender. They won't care too much that there haven't been any missed payments over the last three years - from their perspective, that shows that your brother and his girlfriend can jointly afford the mortgage; it doesn't say anything about whether he can afford to pay for it on his own.

If it was, say, 50% LTV, then the lender wouldn't care nearly as much about the 4x income (though it would still be a potential issue). That's because the lender could just repo the house, and the loan, lender's fees and sale charges should easily be covered by the remaining 50% - meaning very low risk to the lender's capital.

Best of luck. At least it sounds as though the girlfriend isn't planning on being awkward; your brother (and the girlfriend) will save a huge amount of hassle (and legal fees) by keeping it all civil.

Quidco-ette

I see that there could be a problem then..

So if the lender refuse to take her off the mortgage, is the only remaining option to sell?

TrickyDicky

Quidco-ette wrote: »

I see that there could be a problem then..

So if the lender refuse to take her off the mortgage, is the only remaining option to sell?

If they could agree, could they not both stay on the mortgage until values/incomes do increase?

If they sell, they will be jointly liable for the shortfall

Quidco-ette

TrickyDicky wrote: »

If they could agree, could they not both stay on the mortgage until values/incomes do increase?

If they sell, they will be jointly liable for the shortfall

The only problem with this, is that he would be the one paying the mortgage/doing work to the house and if she was to stay on the mortgage until it increased in price she would expect half of any profit.

I have found out from Platform that he just needs to call them to find out if he can afford it on his own and then they will just need to pay £150 to go through the paper work and have it signed by a solicitor..

I have had a look online and I think to go to a solicitor it will costs about £400 for a transfer of equity, but I can see that there are lots of 'online solicitors' that would do it for about £200.. has anyone had any experience with these companies? I take it they are legit?

Peter_L

Quidco-ette wrote: »

The only problem with this, is that he would be the one paying the mortgage/doing work to the house and if she was to stay on the mortgage until it increased in price she would expect half of any profit.

I have found out from Platform that he just needs to call them to find out if he can afford it on his own and then they will just need to pay £150 to go through the paper work and have it signed by a solicitor..

I have had a look online and I think to go to a solicitor it will costs about £400 for a transfer of equity, but I can see that there are lots of 'online solicitors' that would do it for about £200.. has anyone had any experience with these companies? I take it they are legit?

BEWARE - read the thread on Wolstenholmes - yer pays yer money - thankfully I had mine dealt with before they went under but thousands didn't and it was not worth the aggro I had to put up with ...

Quidco-ette

Peter_L wrote: »

BEWARE - read the thread on Wolstenholmes - yer pays yer money - thankfully I had mine dealt with before they went under but thousands didn't and it was not worth the aggro I had to put up with ...

Wowzers.. Thats enough to put anyone off.. He doesn't need any added stress so I won't be suggesting an 'online conveyancing' firm to him.

VIGILANT22

You are better waiting to see the outcome with Platform before making any plans...remember he is in negative equity and earns 17k!!...

Quidco-ette

He is calling after work today so hopefully he will get some good news because this whole situation is a huge mess. Thanks everyone for taking the time to respond.. I will let you know the outcome