Joint Mortgage - if we break up?

Danh

Hi,

I am currently attempting to purchase a house through the shared ownership scheme. After my financial interview I was told that I have enough in savings but my Income-Mortgage ratio is too high and so I would need to do a joint application to proceed.

My question is, if me and my partner were to take out a joint mortgage, if we ever split up would t just be a case of taking her off the mortgage (I realise a fee may be involved in that) or is it a lot more complicated than that?

All of the capital for the property would come from myself.

Regards
Daniel

kingstreet

You would need to be able to demonstrate to the lender that you can afford the mortgage alone. This will be based on your circumstances at the time.

Once that's agreed, the matter is passed to a solicitor for a transfer of equity to be completed. The cost of the transaction is between £400 and £600.

Your partner would have to agree and sign the necessary transfer forms.

holly_hobby

Your income would need to be sufficient to service the mge on your own, for the lender to permit her release (which is called a Transfer of Equity).

If so, and they do agree, the ballpark fee is circa £400 - £500.

With regards to you providing all of the deposit, you may wish to have this recorded under a separate deed, so that on sale or transfer of equity and her release (say following a break up), your ex will have no claim on those monies.

You should also ensure that any life protection is either a joint policy, or if single, written in trust for the benefit of the other.

Your enquiry suggets that you may also wish to consider having the pch effected as Tenants in Common (TIC) where you may apportion the legal and beneficial ownership on an unequal basis (ie 80/20 or whatever), and individually bequeath your share to your chosen beneficiaries, as oppossed to Joint Tenancy (JT), where by legal and beneficial ownership is equally split, and automatically transferred to the surviving owner upon 1st death. It should be noted that however the deeds are held, the mge liability falls both jointly and severally (singularly) liable to each party regardless of any differing % of legal ownership under the deeds.

Your solicitor will guide you as to the most appropriate for your circs and requirements.

Hope this helps

Holly

Voyager2002

Danh wrote: »

Hi,

I am currently attempting to purchase a house through the shared ownership scheme. After my financial interview I was told that I have enough in savings but my Income-Mortgage ratio is too high and so I would need to do a joint application to proceed.

My question is, if me and my partner were to take out a joint mortgage, if we ever split up would t just be a case of taking her off the mortgage (I realise a fee may be involved in that) or is it a lot more complicated than that?

All of the capital for the property would come from myself.

Regards
Daniel

It is a lot more complicated than that. For a start, the bank would only agree to take her name off the mortgage if your income at that time was adequate for the amount borrowed.

In some ways, buying a house together is a larger commitment to each other than marriage, and so should be treated with a similar amount of caution.

johnsomers10

hi, im very new but i recently put up a post about this, as i have split up with my partner and now trying to remove him from our joint mortgage...... it is not a straight forward easy process, plus it depends if your on good terms if you split up it then becomes even more complicated.

Lemonmanda

Hi
We have lived a year in our first jointly owned home and both our names on the mortgage. The mortgage was granted on my income and my husband's credit rating as mine is poor after doing something silly to pay off credit cards and will not fully recover till 2016. I am the breadwinner and pay the monthly mortgage repayments as my husband has no or little income.

We've each paid the same amount of cash deposit. If we sell, how does it work? Does the mortgage get re-paid to the bank and then we equally divide the remainder? My husband is saying that the house gets divided equally between us but I am liable for paying off the whole mortgage out of my share.

If it sells for 240k and we get 120k each will I have to pay the full mortgage of 120k out of my share leaving me with no money? How could I redress this situation if it's true?

holly_hobby

The mortgage lender has 1st charge, which means that BEFORE any free equity is divided between the legal owners, that debt (along with any other secured debt) is fully redeemed by the Solicitor, permitting the lender to release the charge and your purchaser to obtain free title.

So if you sell for 240k, all outstanding secured debts (ie mge and any other subsequent charges) are in the first place fully repaid, with only the remaining residue of capital (if any) forwarded to the legal owners i.e you and partner if you are joint mortgagors, whilst taking account of any single name secured debts that would be redeemed from the each individuals legal share before final apportioning of due capital to each. So you can confirm to your partner that their understanding of how the redemption process works is inaccurate, the mortgage debt on a jointly held mortgage is NOT your sole responsiblity at all - far from it.

Hope this helps

Holly

Lemonmanda

Holly, thank you! I thought so ... if my husband wants his name to come off the mortgage he will have to have his name off the ownership of the house too? I've been looking at the other threads on this subject. If so, have you any advice as to how to do this? Should I look into buying him out? It's looking like we're heading for a split up. He has got another house but is unwilling to sell it and invest in our joint house nor does he want to rent it to afford contributing towards the mortgage here. He has been paying the household bills whilst I've been paying the mortgage repayments, but he has started to complain that he cannot afford to continue to pay the energy bills. Do you think I need a good solicitor?

holly_hobby

If he wants to be released from the mortgage (assuming you're happy with this), for your mortgage lender to permit his release, they will want to confirm that you are able to service the mortgage (inc any equity released to "buy him out") on your sole income.

If the lender refuses, you could consider a remortgage to an alternative lender whom may have a more generous affordability assessment - a broker to source a solution would be good call.

If your income isn't sufficient full stop, then he can't be released, unless the property is sold.

Your first call should be to your mortgage lender to see if in the first place they would be happy to release your partner - the rest will follow as appropriate.

Hope this helps get the ball rolling

H x

Lemonmanda

Many thanks Holly, this has been helpful. I will get onto my financial adviser/mortgage lender and go from there!

Thrugelmir

Lemonmanda wrote: »

Many thanks Holly, this has been helpful. I will get onto my financial adviser/mortgage lender and go from there!

If your husband has other assets i.e. a property. You'll be entitled for a share of those as well if you separated.