Letter of Consent and Postponement - First Direct

martmonk

Firstly I apologise if this has been covered before but my only similar result from searching is here.
https://forums.moneysavingexpert.com/discussion/4393167

This however is different to my situation.

I'll try and be as clear as possible.

Title deeds in wife's name (since before we were together), new mortgage agreed in her name only with first direct.

They are aware we are married and that I contribute to the mortgage payments. We are not adding me to the mortgage or changing the title deeds.

They have sent a letter of consent and postponement which means that first direct can make me leave the property if it ever needs to sell the property to obtain repayment of the mortgage loan.

My question is does this mean that in the (hopefully unlikely) event that my wife passes away, they can and will have the only claim to ownership of the property or am I misunderstanding this completely?

I should be clear that several times in the pack I've received it is advised to seek independent legal advice which I will most likely do. Really just looking for pointers from someone who may have been in similar situation or is familiar.

Thanks in advance.

kingstreet

You are misunderstanding it.

It has nothing to do with death.

As you are (or will be) resident in the property on the date the new mortgage completes, FD requires you to consent to being bound by the mortgage deed.

This means in the event of default/repossession there will be no implied tenancy and you will agree to be bound by the mortgage deed as if you were a borrower and will leave the property on, or before, the repossession date.

It has no other application, so death, sale etc are completely unrelated.

Seek independent legal advice if you are unclear on what you are signing.

holly_hobby

The forms are to do with repossession, beneficial ownership and what will happen in the event of mortgage default - under which you are acknowleding no right of residence or claim.

But also upon your wife's death during the mortgage term, you have no right of residence, and the mortgage will have to be redeemed under the responsibilities of her executor or administrator (in the case of no will).

Once this (along with all other debts) have been discharged by the executor/adminstrator, the estate may be distributed according to her will, or intestacy laws (in the case of no valid will at time of death).

Essentially, this will result in the property passing to you, if she bequests it to you (or may not if she's chooses to leave to A N Other), or (if no will) and you are still married at time of death, it WILL pass to you under intestacy regs (all once probate is complete).

The vital point to note is that if there are insufficient or nil funds in her estate to settle the os mortgage on death, the property will have to be sold, either to you or another 3rd party, in order for the os mge debt to be redeemed, and the property free to pass to whomever is the legal receipient.

So, if the Mrs hasn't sufficient life protection for a least the mge debt, and she wants you to inherit the house, this is an urgent job to be satisfied ..... your mortgage adviser should be regulated to write basic term assurance, as of course will any IFA you approach (whom will also assess any other gaps in protection, both life and income you may have, and make recommendations accordingly).

If relatively young, you may think that death is a long time off, and the mortgage will be repaid (or little owing) by the time that day comes, but it waits for no one, and for the relatively low cost of either of or a decreasing term assurance (if a repayment mortgage), or level term assurance (if an interest only mortgage), you can sleep easier.

Hope this helps

Holly

kingstreet

I agree with Holly, but left out much of what she said because TBH a lot of the situation on death is the same if you own in sole, or joint names.

If one partner dies, leaving the other without an income, the property would have to be sold as the mortgage payments could not be continued.

This demonstrates the need for proper protection and will planning which should take place in every case.

martmonk

Many thanks to both of you. I now 'get it'! in terms of understanding what the letter is and I take on board the advice re solicitor, mortgage adviser and insurances.

My problem was confusing two issuse - the estate in the event of death, and my rights as someone living in the property if defaulted etc.

holly_hobby

kingstreet wrote: »

I agree with Holly, but left out much of what she said because TBH a lot of the situation on death is the same if you own in sole, or joint names.

If one partner dies, leaving the other without an income, the property would have to be sold as the mortgage payments could not be continued.

This demonstrates the need for proper protection and will planning which should take place in every case.

The difference being the property being owned jointly/joint mge, is that legal property ownerhship and right to reside will pass to the surviving mortgagor, without probate or need for a will, with the mge continuing until redemption in the survivors name ....

Whether of course the remaining legal owner and mortgagor can afford to maintain the commitment in the long term is another and separate issue, but importantly they will not immediately lose residence rights upon the death of their fellow owner, as would be the current case of the mge/ownership being in wife's sole name.

Again it comes back to proficient financial planning .... whch also includes how she would cope on the loss of your income on death .... an IFA is recommended.

Hope this helps

Holly