Joint Loan - question from a friend

GreenSaints

Hi all,

I’m enquiring on behalf of a friend, so I’ll try and give as much detail as I can.

In a nutshell, my friend and her ex have a joint loan even though they have been separated for years now. The debt was to consolidate his other debts secured to the house they had (the loan was £30k over 25 years!)

When they split up and sold the house, they agreed this loan would be paid for by him as it wasn’t her debt and from what I gather she had even him more than enough money throughout their relationship to pay off debt. Apparently he pays £280 per month and every 4 months the loan amount is reduced by £100! I’m not very good at maths, but that can’t be a good interest rate!

She rang up the bank and asked if she could have her name taken off as he is willing to sign something to say so, but they said you can’t do this. They said the only way to get her name removed is for the ex to apply for another loan in his name (which he is unwilling to do. She thinks it’s because he has a new partner and hasn’t said anything about his debt) However, if she wanted to pay £15k then they could take her off the loan agreement!?!

So basically, is there anything she can do or is she stuck with it?

[Deleted User]

A joint loan means the bank came come after either or both of them. And any failure to pay will impact both their credit ratings..

So the bank has given good advice. Ideally he needs to get a loan in his own name to pay off the other. That's if a) he wants to and b) can get a loan.

Otherwise, if she is keen to put an end to it and protect her rating, then she may want to consider taking up the bank's offer, if that means they release her from the loan. Maybe not fair, but it's a viable option.

redpete

GreenSaints wrote: »

Apparently he pays £280 per month and every 4 months the loan amount is reduced by £100! I’m not very good at maths, but that can’t be a good interest rate!

For a £30k loan over 25 years, £280 a month is approx 10.5%, so not too bad. The problem is that with very long term loans the monthly payments early on in the period are almost all paying interest rather than capital.

System

Have I missed something? If the loan was secured on the house, why wasn't it paid off when the house was sold?