Transferring of negative equity

athleticodan

We are aware that mentioning the value of the house currently to the current lender will jeopordise any transfer of equity - it states this in their terms and conditions. Any difference would have to be paid up front which is why I am seeking further information from you guys.

The house mortgage is a joint tenancy agreement.

GDB2222

zzzLazyDaisy wrote: »

In otherwords, you can still live together without her being on the house deeds/mortgage (unless, of course, you need her income to get the mutiples required by the lender).

I assumed that was the point. Otherwise, it would be an unnecessary complication.

I think it is going to be hard to get the lenders to relinquish their hold over the outgoing borrower unless a substantial wodge of cash is passed their way, at least to get rid of the NE.

The other point is that the valuation you have sounds like an estate agent's. They tend to come in a bit high, in order to get the business. You'll need a surveyor's valuation, preferably one on your lender's list.

ruggedtoast

You both own half the equity each, and you are both joint and severally liable for the entire mortgage.

If one or other of you can legally offload their commitment for the mortgage to someone else, then they have done pretty well. Personally as someone incoming to this arrangement I wouldn't take on a loan that exceeded the value of the collateral I was gaining.

athleticodan

Judging by the various responses it seems to me that there is NO legal footing as such for one person to either claim or for the other to just walk away and allow the first to carry on with the mortgage it is more MORALLY based.

I feel I can now admit that I am the one who wishes to remain at the property and take on the mortgage with my girlfriend.

As much as I personally wanted to avoid something like this it appears it is going to have to be played out like a game of poker.
I say to him Ok, if you don't want to pay anything then we sell - we both need £6,000! Or he can say give me £3,000 which I have even said I will accept in installments, to settle the issue. All bearing in mind we get the nod on our mortgage (we have been told we can have one for £140,000 - £15,000 more than we require, plus we havent told them about our extra earnings which total around an extra £6,500 a year.

GDB2222

athleticodan wrote: »

Judging by the various responses it seems to me that there is NO legal footing as such for one person to either claim or for the other to just walk away and allow the first to carry on with the mortgage it is more MORALLY based.

I feel I can now admit that I am the one who wishes to remain at the property and take on the mortgage with my girlfriend.

As much as I personally wanted to avoid something like this it appears it is going to have to be played out like a game of poker.
I say to him Ok, if you don't want to pay anything then we sell - we both need £6,000! Or he can say give me £3,000 which I have even said I will accept in installments, to settle the issue. All bearing in mind we get the nod on our mortgage (we have been told we can have one for £140,000 - £15,000 more than we require, plus we havent told them about our extra earnings which total around an extra £6,500 a year.

But these days, mortgages aren't about earnings, they are about deposits. How much cash do you have to put down? And how much cash does your co-owner have to put into the pot?

BitterAndTwisted

Don't forget that if you sell this property to completely sever your financial association there will be additional costs for you both to cover. Like agent's selling-fee and conveyancing, so going that route won't limit your contributions to £6k each but rather more than that.

Ending one joint-mortgage just to enter into another could be jumping out of the frying-pan into the fire as well. If there is any way that you could take on the mortgage alone I think you should do it.

There should be a sticky on this forum about buying properties together when you aren't married. A mortgage-term can be substantially longer than a lot of marriages, never mind just chums or unmarried partners who want to get onto this mythical "property ladder" aka a very venomous snake.

Richard_Webster

There should be a sticky on this forum about buying properties together when you aren't married.

Yes there should, so people can think through the implications because often the commitment to each other is nearly as great as in marriage. Rent together until you are certain of your commitment to each other.

If you are certain of that commitment why not get married? (Ignore marriage industry telling you about all the stuff you have to have at a wedding - you don't!)

franklee

zzzLazyDaisy wrote: »

However, who paid what in terms of deposit (unless this was set out at the time of purchase), bills, mortgage etc are red herrings as they do not affect the legal ownership of the property or change the beneficial interest.

True but I'd say the deposit paid in does matter if the OP really wants to be fair between the two friends.

athleticodan wrote: »

House recently valued at £115,000-£120,000 - and recommended to put on market for £119,500 but accept anything within £5,000 of this.

...
The balance outstanding on the mortgage is £126,486.

athleticodan wrote: »

We are aware that mentioning the value of the house currently to the current lender will jeopordise any transfer of equity - it states this in their terms and conditions. Any difference would have to be paid up front

athleticodan wrote: »

All bearing in mind we get the nod on our mortgage (we have been told we can have one for £140,000 - £15,000 more than we require, plus we havent told them about our extra earnings which total around an extra £6,500 a year.

So how will it work? I'm guessing the new lender will want to value the property, say they call it 115K. You need a deposit of say 20% that's 23K, and you borrow 92K. To settle the mortgage you need another 11K. So between you can you raise 34K in cash? Obviously I'm guessing on the deposit needed so can you post the real figures for how you intend to make it stack up?

As for negotiating with your ex, as it's a joint mortgage you need to be aware what joint and several means to you for the lender chasing the negative equity debt.

GDB2222

Richard_Webster wrote: »

Yes there should, so people can think through the implications because often the commitment to each other is nearly as great as in marriage. Rent together until you are certain of your commitment to each other.

If you are certain of that commitment why not get married? (Ignore marriage industry telling you about all the stuff you have to have at a wedding - you don't!)

The advantage of marriage is that there is then a judge to sort out the finances if the relationship falls apart.

athleticodan

ok for those guys who asked for figures and what my plan is (I wish I had one and that is what led me here I guess).

My friend said he wanted to leave, so this means I have had to do the leg work. I contacted the mortgage company and asked for a transfer of equity. So my girlfriend and I spoke with a family friend who is an independant financial advisor. He guided us through what we had to do and also said that my friend who is looking to leave, should really pay half the loss. This suprised me but when I thought about it, to me, it made total sense.

Anyway we called back the mortgage company and they agreed to an initial agreement in principal (over the phone and said we can get a mortgage for up to £140,000 - we don't need that much just the £125,000 which is still outstanding) but they obviously have to do the full checks/CCJs/contact employers/view my girlfriends details/etc/etc.

ALSO and here is the crux, in one of the final sections on the transfer of equity form, it says the mortgage company MAY want to value the property and I have to leave my contact details.

What is the likelihood of them doing this? I am beginning to think more likely what with all the homes that are possibly in negative equity right now...

So first and foremost, if they do decide to come and value it and see there is a massive shortfall, will they just say 'No you can't go ahead with this transfer unless you pay the difference OR will they say that my friend has to stay until the debt is cleared?

Neither myself or my friend have any real savings - plus we are both paying off car loans but these are comfortably within both our budgets.

I have begun to think about taking the mortgage on my own after some of the latter comments in this thread to see if me and my girlfriend can 'live together' to avoid what could be an even worse situation, I know she will offer to pay rent but I cannot expect her to buy in to something to cover my friends debt!

So, I guess selling is not an option, my friend who is leaving doesn't think he should pay anything, and neither of us have any savings. God, this all seems a lot worse than it did this morning...

My salary is roughly £35,500
Plus I get bonus and overtime which I have held back because genrally these are not considered.
I have total debts (visa/loan) of £8,000.
My girlfriend earns £9,000 a year and has about £500 debts.

I don't know if this makes anything clearer but I can feel a weight beginning to build on my shoulders. :eek: