Getting out of a joint mortgage - any ideas?

kiki11

I bought a house with my sister about 6 years ago. I have not lived in the house now for 3 years as I got married so moved in with my husband. At the time, the bank we had our mortgage with (HSBC) would not let my sister have the mortgage solely in her name, so instead of her having to sell the house, I just stayed on the mortgage but she paid it all herself. This is how it has been for 3 years now, I have not had any financial link to her or the house since, apart from my name being on the mortgage.

At the time of me moving out, if we had sold the house we would not have come out of it with any profit, probably just broken even, so we agreed that when she did eventually sell in the future I would not have any financial gain from it (or owe her anything if that was the case). I know there are risks with this but it's what we decided so that we could both live where/how we wanted.

Now, my husband and I want to move house and get a mortgage together so we can buy a larger house as we have a little girl and another baby due in January. So, we need to get my name off the mortgage with my sister so I am free to get another with my husband (up to now he has had a mortgage on his own for the house we currently live in).

What I want to know is, if the bank will not let my sister have a mortgage on her own, will I be able to also get another with my husband? And, will HSBC, if they do let my sister have a mortgage on her own, keep the same rate she currently has (its quite low, something like 3.5%) because if not and her payments shoot up she probably wont be able to afford it.

We are obviously going to go and talk to HSBC but I just wondered if there was anyone in a similar situation who had any advice?

Many thanks!

ACG

If she meets their affordability then she can have your name taken off and everything is ok.
If not then she could maybe try to appeal it based on the fact she has been paying it for years on her own anyway and can prove it.

She should be able to keep that rate presuming they take your name off it, however based on the fact you have said if rates do go up then i imagine she will struggle to have your name taken off it.

Annisele

Having an existing mortgage with your sister won't stop you getting a new one with your husband. However - and this may be a big issue for you - it'll seriously impact the amount a new lender will be prepared to lend you. The new lender will want to be sure that you can pay both the old loan (on the house your sister lives in) and the new one (on your new house).

Is your husband's income likely to be enough to support the new mortgage on his own? If it is, then a lender might be happy to make a joint loan to the pair of you even with the existing mortgage in the background.

As ACG says, if your sister would struggle if rates went up, then I think HSBC are likely to be reluctant to take your name off. HSBC are a pretty picky lender though; it's possible she'd be able to remortgage elsewhere - but that'd mean she lost the rate.

michelle2008

Have you and your sister discussed what will happen when rates do go up? If she would struggle, does she have sufficient savings to make uphe balance until she could sell? If she doesn't you would have to step in or risk your credit rating.

Also, if something happened to you is it clear that the half of the house goes to her and not your husband?

First things first though - your sister needs to see if she meets the affordability criteria for the mortgage. If not she may need to consider downsizing.

kiki11

Thanks to you all for your replies. We went to HSBC yesterday and it was all quite straightforward. My sister is now earning enough for the bank to agree to her having the mortgage on her own so it will cost us £190 for the transfer to happen and she can keep the low rate she is on. I needn't have worried! Thanks again for your comments though!