Tenancy in common with one name on mortgage / Joint ownership queries

TheDutch

Hi again,

Is it possible for a house to be purchased by two people as tenants in common but with only one of them named on the mortgage?

I am looking to buy a property which will be owned 50:50 between us. They will be paying their 50% in cash, I will be 25% cash and the remainder via a mortgage. I would like to retain the mortgage as my own concern and liability only, is this possible or will all the documents have to state both names?

Further to this, I would like the proceeds of any sale to be split 50:50, and any outstanding mortgage to be paid by me only. For this (and other scenarios) I will presumably need a legal document detailing this, is this common practice?

I've taken a look through other threads but none seem to quite cover this situation, so any other comments about the above concept gratefully recieved.

Ta!

kingstreet

Mortgage lenders insist the mortgagors and the ownership of the property match. HSBC will allow someone to be on the mortgage, but not on the deeds, although why someone would want to do that I'll never understand.

It comes down to a lender not being able to repossess half a property, so they insist on jointly owned property having a joint mortgage governed by joint and several liability.

TheDutch

kingstreet wrote: »

Mortgage lenders insist the mortgagors and the ownership of the property match. HSBC will allow someone to be on the mortgage, but not on the deeds, although why someone would want to do that I'll never understand.

It comes down to a lender not being able to repossess half a property, so they insist on jointly owned property having a joint mortgage governed by joint and several liability.

Thanks for that, I half guessed that would be the case. Given this, is there any way to make me 100% responsible for clearing the balance of any outstanding mortgage should we sell, such as in a declaration of trust?

Lastly, since both names will have to be on the mortgage, when credit assessments are carried out is there any way the risk would be considered worse than if it were me applying in isolation? i.e. the second applicant will be contributing zero income and may have a worse credit rating, will that have an adverse effect?

kingstreet

An adverse credit history for one applicant would make it difficult to get a mortgage. No, you can't remove someone's liability to repay a mortgage using a declaration of trust. The lender will have joint and several liability to rely on. That means both borrowers will be equally responsible for 100% of the mortgage.

johnk

kingstreet wrote: »

Mortgage lenders insist the mortgagors and the ownership of the property match. HSBC will allow someone to be on the mortgage, but not on the deeds, although why someone would want to do that I'll never understand.

It comes down to a lender not being able to repossess half a property, so they insist on jointly owned property having a joint mortgage governed by joint and several liability.

Actually, HSBC also allows mortgage to be taken by one person on a jointly owned property - but the other person must sign a deed. At least this was a choice I was offered earlier this year.

kingstreet

johnk wrote: »

Actually, HSBC also allows mortgage to be taken by one person on a jointly owned property - but the other person must sign a deed. At least this was a choice I was offered earlier this year.

Are you sure? I thought it was the other way round. I thought you could be party to the mortgage if not on the deeds. It would cause them considerable difficulty in repossessing if they could not enforce the mortgage deed against one of the owners.

As I mentioned in my opening post, I don't understand why someone would want to be on a mortgage if not on the deeds. That's all the downside with no upside whatsoever...

Can you tell us more about the circumstances and what you were trying to do?

johnk

Yes. The property is joined owned but the partner is self-employed. My LTV is very low (below 20%) and my salary multiple covers comfortably the proposed advance. The choice I was given are either a joint mortgage but the partner needs to produce three years accounts; or on my self but the partner needs to sign a deed to protect the bank in case of repossession. I applied in the branch if that makes any difference (the suggestion was from the underwriter though, as far as I understand).

kingstreet

Thanks for that, john.

In that case the OP needs to contact HSBC as I think that will be the only lender open to him.

TheDutch

johnk wrote: »

Yes. The property is joined owned but the partner is self-employed. My LTV is very low (below 20%) and my salary multiple covers comfortably the proposed advance. The choice I was given are either a joint mortgage but the partner needs to produce three years accounts; or on my self but the partner needs to sign a deed to protect the bank in case of repossession. I applied in the branch if that makes any difference (the suggestion was from the underwriter though, as far as I understand).

This sounds almost exactly like my situation and aim. Do you know whether there was anything particular about this mortgage from HSBC, or was this an option with any of their mortgage offerings? (I was considering their lifetime tracker.)

getmore4less

You could look at an offset at 50% LTV

You both put down 25% each, OH offsets their other 25% leaving you with 25% to pay interest on your own, you then build up your offset pool.

Mortgage gets paid off on sale and the offset pots are your own money which achieves what you want.

If the motgage has to be repayment there needs to be some adjustments but still can achieve the basic goal.

johnk

TheDutch wrote: »

This sounds almost exactly like my situation and aim. Do you know whether there was anything particular about this mortgage from HSBC, or was this an option with any of their mortgage offerings? (I was considering their lifetime tracker.)

Mine was lifetime tracker as well. I was suggested the choices as there was some difficulty to product the three years accounts for the joint application.