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Mortgage Financial/Moral Dilemma
whatdirection
Posts: 5 Forumite
I am a semi-regular user, but posting here as my username is quite obvious if you know me.
I have a bit of a financial/moral dilemma.
My partner took out a 100% mortgage (95% with 5% loan), 5 years ago, with his ex partner. 3 years ago when they split, everything was transferred over to his name only.
It has now come to light that whilst yes the mortgage is in his name only, the 5% loan still has her name on (although only my partner makes the payments), and this cannot be altered unless the loan is paid off in full. She wants her name off, as it is stopping her from buying a property. We want her name off as we want all ties cut (which we thought was done already). However, we cannot afford a loan to pay off the loan, as it would triple the payments currently being made.
Speaking to friends and family there is a huge divide of opinion. Many are saying, well, she wants her name of, so she will have to take the financial hit if so.
Financially, as she has no rights to the house, I think we should leave things as they are, and she will need to come up with a plan of action. Morally, I don’t want to stop her being able to move on with her life. But the fact is, we cannot afford any more outgoings, things are stretched as it is.
I would appreciate some opinions, and also advice that if we were to not pay the loan off and restart and her name remains on it, is there legal action she can take?
FYI – I am totally aware that both parties have been extremely naïve and stupid to not have checked out all ties were cut!
I have a bit of a financial/moral dilemma.
My partner took out a 100% mortgage (95% with 5% loan), 5 years ago, with his ex partner. 3 years ago when they split, everything was transferred over to his name only.
It has now come to light that whilst yes the mortgage is in his name only, the 5% loan still has her name on (although only my partner makes the payments), and this cannot be altered unless the loan is paid off in full. She wants her name off, as it is stopping her from buying a property. We want her name off as we want all ties cut (which we thought was done already). However, we cannot afford a loan to pay off the loan, as it would triple the payments currently being made.
Speaking to friends and family there is a huge divide of opinion. Many are saying, well, she wants her name of, so she will have to take the financial hit if so.
Financially, as she has no rights to the house, I think we should leave things as they are, and she will need to come up with a plan of action. Morally, I don’t want to stop her being able to move on with her life. But the fact is, we cannot afford any more outgoings, things are stretched as it is.
I would appreciate some opinions, and also advice that if we were to not pay the loan off and restart and her name remains on it, is there legal action she can take?
FYI – I am totally aware that both parties have been extremely naïve and stupid to not have checked out all ties were cut!
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Comments
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the 5% loan still has her name on (although only my partner makes the payments)However, we cannot afford a loan to pay off the loan, as it would triple the payments currently being made.
Please could you expand on this. Amounts, rates and terms would help.
(My gut reaction is that you should do the morally correct thing, although there must be a temptation to cancel the direct debit and let her know she's on her own!!)0 -
FWIW in my own unlegal opinion, I don't see how she could use the law to 'force' her name to be removed from her debt other than by paying the debt off herself. It is still her debt after all - oh the joys of joint and several liability.
What is the size of this loan and what is the rate applicable to it and over what term must it be repaid?0 -
The loan is for £12k. This is over 25 years (same term at the mortgage), and the repayments are £63. We've looked at loans to pay this off, and we'd be looking at repayments around the £270 mark.
Apologies, I don't remember what the rates are without the paperwork in front of me.
We have no issues paying the loan. We don't want a contribution, but the crux of it is - it doesn't suit her to be on the loan as it ruins her chances of getting credit for her own property, so she wants out. The only way for her to get out, is for the loan to be paid off in full. They will not alter it to be in just his name, or swap her name to mine, the only resolve is for the loan to be paid off.0 -
My partner took out a 100% mortgage (95% with 5% loan), 5 years ago, with his ex partner. 3 years ago when they split, everything was transferred over to his name only.
Need a bit more info here
It seems this was intended to be a clean break but the loan got overlooked.
5y -3y ago there was probably a bit of equity but not enough after costs so was this a simple there is nothing to divi up, I will take on the debt and thats us finished.
AS for the loan term amount rates etc to see if there is an angle to get you sorted. it is probably still tied to the mortgage rate
Whats the current equity on the mortgage.
It is in your OH interest to get the financial link broken.0 -
The loan is for £12k. This is over 25 years (same term at the mortgage), and the repayments are £63.
interest only this will be 6.3%
repayment over 25 years 4% ish
is this interest only or repayment
is the mortgage interest only or repayment
How much could you afford?0 -
Loan and mortgage are both repayment.
Both parties want all links broken, however if to do so it is going to cost us a fortune yet she swans off and can buy her own property, it doesn't seem right.
We could afford slightly higher repayments, maybe around the £100 mark but that's as far as we would comfortably want to go.
My partner has never asked her for a penny, it was a clean break ..unfortunately no one checked for splinters!0 -
Will the lender let you go interest only on the mortgage and overpay the loan to get rid of it quicker?
if £12k 5% makes 95% £240k
repayment over 25y at same rate as loan £1260, interest only £790. that £470pm should cover a replacement loan
(check the rate the calcs say 3.948% which looks bit low for this type of loan.)
Both parties want all links broken, however if to do so it is going to cost us a fortune yet she swans off and can buy her own property, it doesn't seem right
Come on it is not costing you a fortune its costing the same amount he agreed to take on with the split and you have the house at no extra costs and still with a deposit much smaller than you could get if you were buying now.
If he was not happy should have sold, still can.
Having the £12k and the rest of the mortgage over 25 years is costing the fortune.
£12k 25years £63pm is around £6900 in interest
A 12 loan at 10% with £470 + the £100 would be 2 years and cost £1250 in interest so if you can retructure you will save you money.0 -
Thank you, I will have to get him to make another call to them today.
But if we are unable to do that, then yes to pay off the loan will cost a fortune. Lowest repayments we have found are £270 compared to £63 at present.
Is the onus not on her if she is the one who needs this sorted (as opposed to us wanting it sorted).0 -
Bit harsh to make her suffer a hit after 3 years, when she could have forced other options in 2008 which might have helped her side of the equation, and hurt him more...Act in haste, repent at leisure.
dunstonh wrote:Its a serious financial transaction and one of the biggest things you will ever buy. So, stop treating it like buying an ipod.0 -
whatdirection wrote: »Thank you, I will have to get him to make another call to them today.
But if we are unable to do that, then yes to pay off the loan will cost a fortune. Lowest repayments we have found are £270 compared to £63 at present.
Is the onus not on her if she is the one who needs this sorted (as opposed to us wanting it sorted).
Why don't you remortgage the property into both your names and consolidate the debt in the process?0
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