Re-mortgage with change of title

Happyclappy

Hi all!

I'm wondering if anyone has any words of wisdom for me?

My partner and I have been living together for around 6 years now, since I moved in with him. We've been thinking it's way over time we sorted out our wills and finances to make sure we each continue to have a home etc if the other one dies. We saw a solicitor who advised us that for me to be recognised as the home owner if he died (ie. joint tenants), we need to officially change the title on the mortgage (which is in his name.)

We rang the mortgage company who sent the forms and told us that this will cost £150. I'm a bit form-phobic to be honest and as our (ie. his) fixed term was due to end soon and I want to pay off a large chunk in one hit, we thought we'd wait until then, thinking we could do it all together and hopefully, reduce any fees.

Other things to consider are: I currently earn very little but am officially self-employed (earning a bit of pocket money but basically a housewife, albeit unmarried.) I have only done one tax return and don't have a business bank account. But, I do have a great credit rating and a lump sum to invest.

Anyway, we rang the mortgage company again today, thinking we could arrange the title transfer and re-mortgage in one hit, but have been surprised by their apparently weird response (why am I surprised? I don't know. I thought they'd jump at the chance to get us to re-mortgage.) Instead, the woman in 'Re-mortgaging' told us we should arrange the new fixed term first, with me paying off the chunk. Then, we should apply for the change of title, which they might or might not agree. But obviously, I'm not keen to invest in a property that they might not allow me to own! I said that and she said then we should do it the other way round (which will mean waiting around outside the fixed term so paying more than we need to)... Hmm... I got the strong impression I was talking to someone who didn't really know what we should do!

I know this can't be an unusual situation. Do you think we'd get better service if we changed provider or went with a broker? Any ideas??

Many thanks

kingstreet

First of all, it isn't a remortgage if you are staying with the same lender. Published remortgage products are for borrowers new to that lender, so it's best not to use a term which applies to a different borrower group.

Lenders offer their existing borrowers customer retention products, or product transfers. These rates do not require a new application and no status enquiries are made.

However, where a transfer of equity is concerned, the lender will carry out checks on the new borrower as they would any other new applicant. The total cost of a transfer of equity is usually between £400 and £600 where there's a mortgage involved, as a solicitor has to complete the formalities with the Land Registry after the additional party has been added to the mortgage.

In the circumstances you describe, you should consider;-

Option 1

Approach the current lender to carry out the transfer of equity and have the party added to the mortgage and deeds. Once that is completed, pay off the lump sum, then ask the lender for a new product, based on the new mortgage amount and loan to value

or

Option 2

Approach new lenders with a view to remortgaging in joint names. Establish the best deal, based on the lower mortgage amount which would result from the lump sum payment. Many lenders cover the cost of a remortgage, but the legal costs of the transfer of equity won't be part of that. Once the mortgage is agreed and ready to complete, pay the lump sum to the solicitor handling the remortgage and TofE, so he has this, plus the new mortgage money, to repay the old mortgage.

Either way, you have the lower mortgage, the better rate and the mortgage and the deeds in joint names without the worry of making the lump sum payment and being rejected for inclusion in the current arrangements.

holly_hobby

Happyclappy wrote: »

Hi all!

I'm wondering if anyone has any words of wisdom for me?

My partner and I have been living together for around 6 years now, since I moved in with him. We've been thinking it's way over time we sorted out our wills and finances to make sure we each continue to have a home etc if the other one dies.

If the sole purpose in effecting the TOE (alongside a mortgage product change) - is that the property will revert to you on your partners death - there are simpler ways to achieve this ..... although the following example will not give you any legal ownership pre-partners death, or recognise any financial payment (deed of trust may be used to ringfence capital, subject to circs), which may or not be important at this point in time.

Going along the avenue of your provision on his death, this will be dealt with by effecting a term assurance policy (joint lives if both your incomes are important and affordable, but at least on your partner, who is the mortgagor) - of which the proceeds from the term assurance on death will repay the os mge.

If a sole policy is effected in his name only, this should be written under trust for your benefit (meaning that you get the sum assured a without having to be delayed by probate). If a joint policy is written, it will be on a joint life, first death, basis - with no requirement for it to be written under trust for the suriviving party - and means that if you disappear first HE will have the funds to repay the os mge, which may take financial pressure off him, at what will already be a distressing time and period in his life.

He (& you) should also effect a will (vital if you are not married), in which he leaves the property (with the mge now repaid via the term assurance policy proceeds), and of course anything else he wishes to you .... following which you may have the property lawfully transferred into your name via land registry (with your Sols assistance if reqd).

An IFA will assist with discussing life and income protection needs you have as a couple (which should be updated as life trundles along and family financial needs and circs change), whilst your Solicitor will assist with the writing of wills (unfortunately Will Month has just ended, but typical cost of a single will is circa £125+, and a mirror will apx £200+)

IF this a 2nd relationship for him, with a surviving spouse and issue, then whilst a professionaly executed Will should top and tail things, it would be beneficial to seek Joint Tenancy at the earliest opportunity, just to ensure lockdown of your possession on his earlier passing.

Hope this helps

Holly

Happyclappy

Many thanks to you both for your replies - they are greatly appreciated. I didn't entirely understand everything written at first but I've read it a few times now and think, THINK, I've got it. My partner does have a grown up son so that is an issue too. So, 1st thing to do, if I've understood things correctly, is to go for joint tenancy and ensure his life cover is written under trust for my benefit. Get the wills done. Pay off a lump sum. And, sort out a good new mortgage.

Got it! (I think.) Thanks! :T

holly_hobby

Not exactly ....

When I say "issue" I actually mean children .... to which you have confirmed he has one adult (non dependant) son.

If you are not married, and the property is not held as joint tenants, and your partner has no valid will at the time of his death, the property (or his share) will automatically go to his son under the laws of intestacy.

The 2 ways to deal with this are ...

A) Transfer the property into joint names under a Joint Tenancy (subject to the current mge lenders agreement or your meeting the criteria of an alternative mge lender)

.... meaning on your parnters death his share will automatically transfer to your ownership - with the mge unaffected ie remaining payable.

To which life cover in respect of the mge debt (joint if affordable), is of course advised so that the property becomes mge free on 1st death.

However, if you anticipate your income to be sufficient to maintain the mge (and without other dependants as noted) - life cover isn't an absolutely essential if your budget is very tight - however if when looking at your budget you have some non essentials, and can cut back on one or 2 to accomodate the costs of life cover, then I would STRONGLY advise you do this. I would expect your mge adviser/IFA to already be recommending this.

OR

(if the TOE is prevented re your current suitability or you elect not to pursue it)

Your partner writes a will leaving the property to you, which means that you obtain legal ownership, subject to repayment of the os mge as part of settlement of his estate.

To which life assurance is essential and effected for a sum at least equal to the mge debt, in at least your partners name (written under trust for you).

The mge is repaid from the term assurance proceeds, you inherit the property and title mge free - job done.

Hope this helps

Holly

Goldiegirl

If you wish to be added to mortgage, I don't think the lender would have too many issues in approving the application.

By adding another person to an existing mortgage, their risk is not increased, and if a part repayment is being made, their risk is actually being decreased.

Happyclappy

Thanks Goldiegirl,
Yes, that's pretty much what the solicitor told us - good to have it repeated here.

Happyclappy

Hi Holly,

Thanks again for taking the time to reply and to clarify things for me. Originally, we were thinking of just sorting the wills out, but then I realised that, of course, there's nothing to stop him changing his will at any time (not that he would, but I don't want to be daft.) The years are passing by quickly and I don't want to suddenly find myself homeless after living with him and contributing to the household for many years. So, it sounds like we definitely need to change the title to Joint Tenancy.

We've also been onto the Mortgage Life Insurance people today and they're sending us the forms to put the policy in trust for me.

I'm just wondering though... what would be the reasons for not wanting to transfer to a Joint Tenancy? I am a bit nervous of becoming liable for a large debt given the lack of jobs where I live. Are there any other reasons?

Also, can anyone offer advice on how much of the mortgage I should pay off? Is there a rule?

Many thanks everyone!

holly_hobby

Even if you effect the deeds under a tenancy in common arrangement, as oppossed to a Joint Tenancy, this does not effect the fact that you will both be jointly and severally (singularly) liable for the entire mge debt under the mge - so if this is an issue for you, then you may wish to think over any TOE.

Regarding lump sum repayments, usually its 10% of the os balance, unless the mge is penalty free.

H

Happyclappy

We're just now outside of our fixed term. I thought we could just pay off as much as we want for free, is that not the case :question:

holly_hobby

Happyclappy wrote: »

We're just now outside of our fixed term. I thought we could just pay off as much as we want for free, is that not the case :question:

If your mge deal has ended and you are on standard variable, then ordinarilly there are no early repayment penalties .... but you must check your mge T&Cs to verify this, or simply ring the lender and ask them !

Hope this helps

Holly