Transfer a mortgage to another person

MartinNeedham

If possible I would like some help, I have been renting a house of my friend for the last few years, and he now wantS to sell it but I do not think I would be able to get a mortgage to buy it, however he re-mortgaged the property during the boom years and the outstanding mortgage is £265k but the value of the property now sits at around £190k so he has a negative equity of £75k and would need to make this money up out of his own pocket before the bank would release the house. (Is this correct ?)

So my proposal to him was that I was in no rush to move from the property and would be happy there for the next 20 years, so we go to the lender together, and ask them to transfer the debt from his name to my name & transfer the house to my name also, thus releasing him from any bad debt. Also the bank have a new customer who is happy and capable to continue paying the mortgage, and I get to stay put.

To me it seems like a win win all round. But. What I need to know is the even possible, do banks allow this ???

Please can someone help

kingstreet

A lender is unlikely to accept such a proposal. They may be prepared to add you, but are unlikely to take him off. The negative equity will make them very nervous.

Would your income be sufficient to cover a £265k mortgage? You'd need to be earning about £66k, after taking any credit commitments and dependents into account. You'd be vetted for the mortgage like any other applicant.

A sale would see your friend having to make up the negative equity, or at least make an arrangement with the lender to repay it over an agreed timescale.

loubel

No, you will not be able to do this.Why would you want to take on a £265K liability in exchange for a £190K asset anyway?

If you want to buy the property you will need to arrange your own mortgage. If the property is worth £75K less than your friend owes on it then, as you said, he will have to find that extra money in order to sell to you.

Why do you not believe you will get a mortgage?

MartinNeedham

I would not get a mortgage, because I am a builder who has recently gone back into full time education, I am still earning sufficient income but it is all over the place

kingstreet

If you are unable to obtain a new mortgage, you will be unable to become a party to the current mortgage for the same reasons.

MartinNeedham

Poop, was sort of hoping they would consider a straight transfer of contract, taking payment consideration into account, at the end of the day it is me that has been paying the mortgage over the last 3 years.

But thank you for the help

Just worked it out my income would be around the £56k mark but as I say it is all over the place

MartinNeedham

The reason I was considering, is that, :

He would benefit from being rid of a bad debt hanging round his neck.

I would get the house without forking out the cost of deposit & am happy to stay in the house long term, so the negative equity would not be an issue.

The bank would get there money back, without worrying about the negative equity.

Which is why I thought it was a win win all round.

Thrugelmir

MartinNeedham wrote: »

The bank would get there money back, without worrying about the negative equity.

There's no guarantee that you will not default on the debt.

R_P_W

Even if you could transfer a mortgage why do you think there would be any different rules than applying for your own new mortgage?

The lender is not going to let him sell the house with £75k of negative equity.

Why does he need to sell? If your happy to live there and you are paying him rent to cover the mortgage why not just carry one as you are?

Let_Us_See

Whoaaa. I think it is a positive reflection of this forum that some tried to offer genuine constructive advise. Personally, I think he should be locked away for his own good until he can see "taking over" a property with current negative equity is in affect handing his friend £75,000 and then saddling himself with the same debt. Thank goodness his aims are unachievable!

Thrugelmir

Let_Us_See wrote: »

Whoaaa. I think it is a positive reflection of this forum that some tried to offer genuine constructive advise. Personally, I think he should be locked away for his own good until he can see "taking over" a property with current negative equity is in affect handing his friend £75,000 and then saddling himself with the same debt. Thank goodness his aims are unachievable!

Behind every post made there's far more that isn't said.