Equity Buy-in and related questions

doberman100

Hi,

A few months ago my girlfriend and I moved into a house together with me paying all deposit and fees, purely because I was the only one who could afford it. £14k deposit, and about £6k in fees, as I was selling my flat.

Now we want to go into things together with my gf paying against the mortgage too. I have called First Direct (FD) and they have told me that they can do an Equity Buy-In, which means there would be no redemption fee or deposit applicable.

However, I have two related questions:

1. Credit Check

My gf just used Equifax to find out what her credit score is. It's really low (in the red). FD said that it is very unusual for another person to be refused when doing an Equity Buy-In, because it actually decreases the risk for them (two people to chase for cash instead of one) - plus the fact that I have a strong record and have already been approved as a sole applicant for this mortgage.

Has anyone ever been in a case where they have added their partner to the mortgage and they have been refused? FD imply that everything will probably be ok, but it would be good to get some opinions from out there.

If there IS a problem then we would have to go with another provider and pay the redemption fee, but I understand that because its a mortgage transfer there would be no deposit or anything like that - so not a total disaster if we had to do that.

2. Deposit for initial house move

To get into this current house I paid all the deposit and fees, so have been concerned that in the worst case scenario my partner would be given this, in part, in any sale of the house, which I don't think is fair because I worked 13 years for this - my entire life savings in fact, and obviously I have no savings at all now. The move totally cleaned me out.

My partner said she would have no problem with me getting all the deposit back first and foremost in the event of a sale, and having this drawn up legally, which is a lovely gesture of course. At the moment she pays me a contribution to the mortgage and bills - but we didn't do a joint application in the first instance because a) she knew her credit rating was really poor and as such we would have our interest rate hiked right up, and b) she had no savings to add to the deposit, so I took on everything to get round this.

Would this be easy to get set up by a solicitor? Has anyone else done anything like this?

And just to be clear here - my gf and I have a wonderful trusting relationship but are just trying to be prudent about things and take everyone's feelings on board (been totally flamed on here in the past for asking questions and getting opinions)

kingstreet

A transfer of equity requires similar status checks to those carried out when someone applies for a new mortgage.

A credit search is carried out and an applicant can be rejected if they don't meet the lender's requirements. I can't speak for FD, but it would be odd if they simply added all the rejected borrowers via TofE after the event. It would make one wonder why they bother declining them in the first place?

Why didn't you simply apply for a joint mortgage/purchase when you bought the place? You're now looking at a cost of £400 to £600 to do what you could have done for nothing when you bought the property.

Once the mortgage work on the TofE is completed, the matter is passed to a solicitor for the legal work to be done. At that point, you can establish the joint ownership on a tenants in common basis and have a deed of trust drawn up so you can protect your initial deposit.

A TofE may have stamp duty implications;-

http://www.hmrc.gov.uk/sdlt/calculate/transfer-ownership.htm