Removing name from joint mortgage

kingstreet

A mortgage is a joint and several liability.

A lender will not allow a borrower to repay "their share" and leave one party with a single/sole liability.

One simple question. If the sole party was to default on the mortgage, how would the lender repossess only a proportion of the property?

Exactly.

It can't happen and that's why lenders only release borrowers from liability at the same time as they release them from beneficial ownership, via a legally-supervised transfer of equity, on relationship breakdown, for example.

ValHaller

kenwaard wrote: »

Thanks Sparx, we have a signed cohabitation agreement and declaration of trust drawn up showing who is liable for what costs and associated house ownership %'s so effectively we have agreed to be liable for 50% though of course as you say the bank just wants 100% + interest back regardless of who pays it.

We are agreed between us and now just need to know if its possible as per my questions. I did visit the bank today but slightly worringly their representative wasnt too sure!

The others have addressed the mortgage - there is nothing which can be done. But I suggest that you revisit the trust declaration and update to reflect current circumstances.

Goldiegirl

The lender requires the mortgage and the property to be held in the same names.

Therefore if she was removed from the mortgage, she would have to have her name removed from the Title to the property - that would mean she would no longer be a part owner of the property.

Considering that she's investing a large sum of money into the property, to my mind it wouldn't make sense to have her name removed at the land registry and therefore not own the property any more.

That doesn't seem like a sensible thing to do.

kenwaard

Thanks all for the responses - really appreciated. It seems people on this forum know more than the bank lending the money!!

Some interesting points regards the other options available and how we can address the situation.

liltdiddylilt

Hi

People seem to have already answered the question above but I did want to say; why the need to remove her from the mortgage? I understand that she would no longer need to pay into the mortgage, as such, but if you already have a co-habitation agreement in place, why not add a further agreement stating that should the relationship break down etc, she will not be liable, you will cover the mortgage costs etc.

As a warning, to both of you.... I bought with my (now ex) boyfriend & when we split on good terms, he agreed to pay me a set amount within 2 years if I left everything bar a few ornaments & my clothes. The house was in neg equity, so no possibility of a sale & he was unable to pay me back at the time of the split, or get the mortgage in his own name. After 4 years of nicey nicey phone calls I am STILL on the mortgage & deeds, & he STILL owes me money but blew up at me just before Christmas after bailing on a pre-arranged (very small :mad:) payment once again. We haven't spoken since & I don't see the situation being resolved any time soon.

Things can start out with the best of intentions and break down unfortunately. I sincerely hope that nothing should ever happen to your relationship, but... IF IT DID, how would you go about repaying her the money from the house? Yes, you could sell... but could you single handedly cover several thousand pounds worth of fees? Legal costs? What if the house did not sell?

Discuss this at great length with both your partner and the bank before stepping in to anything...

zzzLazyDaisy

kenwaard wrote: »

Thanks.. our agreement is in %'s rather than £ amounts so any overpayments wil not affect equity amounts etc so pretty comfortable on that. Sounds like it comes down to one question which it sounds like I now know the answer to. Can we remove a name from the mortgage whilst keeping on the house deeds?

No great drama if not.

As others have said, you cannot remove one persons name from the mortgage while leaving their name still on the house deeds. This is because of the 'joint and several liability issue (you are both equally liable for the full amount), and also because a lender cannot repossess half a house.

But just going back to the percentages. If the agreement is (say) that if the house is sold, each will get 50% of the net equity after the mortgage and fees have been repaid, that works as long as you are both paying equally into the mortgage.

But if your mortgage is (say) £100k, and your gf pays off £50k in a lump sum, this would leave you with only a £50K mortgage (and an extra £50K equity in the house). If you split up the following year, and the house was sold, you would each get 50% of the net equity, which now includes the £50k that she has paid off the mortgage. So she would lose £25k at a stroke, and you would profit by £25k. This is why any significant over payments by one of you should be reflected in the Trust Deed.

kingstreet

Incidentally, HSBC is happy to have more borrowers on the mortgage than there are named on the deeds as owners.

Although why anyone would want all the downside of the liability and none of the upside of ownership is beyond me...

Land_Registry

kingstreet wrote: »

Incidentally, HSBC is happy to have more borrowers on the mortgage than there are named on the deeds as owners.

Although why anyone would want all the downside of the liability and none of the upside of ownership is beyond me...

This is the same from a land registration aspect as well.

The registered owners must also be the named borrowers for the mortgage to be registered as a legal charge BUT you can have more borrowers as well. It does not work in reverse though i.e. two registered owners but only one borrower.

As to why some lenders seem 'happy' with additional borrowers, whilst others do not, I have no actual knowledge but it may be that they view the extra name(s) as providing some form of additional 'liability' although some may see that as a role best covered by any named 'guarantor'?