Mortgages and tenants in common

MeOnMonSavExp

I’m buying a property with my partner as tenants in common (50/50). My share doesn’t have a mortgage on it, but hers does which she’ll pay for. The LTV of her mortgage is less than 40% of her share alone.


Her lenders want to put my name on the mortgage (I imagine this is standard), which I’m aware makes me responsible for paying it should she default. I’m interested in what their logic is in having my name on the mortgage. It is simply because I’m another adult living in the house? Or does having my name on the mortgage allow them to force a sale (should my partner default) even though I would be a separate owner of a 50% stake?



Does anyone have any views on this arrangement?

antrobus

MeOnMonSavExp wrote: »

..... Or does having my name on the mortgage allow them to force a sale ....

That.

S10CL

kingstreet

MeOnMonSavExp wrote: »

I’m buying a property with my partner as tenants in common (50/50). My share doesn’t have a mortgage on it, but hers does which she’ll pay for. The LTV of her mortgage is less than 40% of her share alone.


Her lenders want to put my name on the mortgage (I imagine this is standard), which I’m aware makes me responsible for paying it should she default. I’m interested in what their logic is in having my name on the mortgage. It is simply because I’m another adult living in the house? Or does having my name on the mortgage allow them to force a sale (should my partner default) even though I would be a separate owner of a 50% stake?

How you hold the ownership is of no interest to the lender. The whole property is its security for the loan, which must be in both names if you want joint ownership.

Any joint loan is "joint and several liability" so there is no her half, your half.

You cannot use half a property as security, for fairly obvious practical and legal reasons. There is no market for half a property.

StuC75

Best for you to be on the mortgage, since if she defaulted on payments and the bank repossessed it would be the full house that they would get - your 'share' would be taken too.. The bank wouldn't really want additional names on the deeds to what is on the mortgage.. since you wouldn't really be able to protect your share too - also complicated in that you would be an adult living in the property but not classed as her dependent...

MeOnMonSavExp

StuC75 wrote: »

Best for you to be on the mortgage, since if she defaulted on payments and the bank repossessed it would be the full house that they would get - your 'share' would be taken too.. The bank wouldn't really want additional names on the deeds to what is on the mortgage.. since you wouldn't really be able to protect your share too - also complicated in that you would be an adult living in the property but not classed as her dependent...

Thanks. I'm trying to get my head around this. The LTV of the total house price is something in the order of 20% - not much. But, as I understand it, in the case of a repossession the bank would take its money first and then, as tenants in common (50/50), we would each receive 50% of the residue. Is that right?

tBagpuss_2

Yes, if you simply state on the TR1 that you are tenants in common in equal shares.

However, you can have a separate cohabitation agreement and declaration of trust drawn up which defines what responsibilities you each have and what you are each entitled to.

it would not bind the mortgage lender but as between the two of you would define your shares and what order you should be paid out in.

If you go down that route, you should review the agreement regularly to make sure it remains up to date, and in the event that you were ever to get married you should ensure that you have a pre-nup if you want to retain separate shares after you marry.

getmore4less

Why not just double the mortgage and keep a bit of your cash back to pay your share.

keeps it simple and easy and truly 50:50

no need for any extra docs that will cost.

If the oh can overpay you can match.

getmore4less

Another option we used was offset with separate single name offset accounts against the joint mortgage.

loubel

As others have said, you can't get a mortgage in one name over jointly owned property or over one person's financial share of a property. As far as the lender is concerned, the mortgage is joint and so you are both liable for full payment.

You should ask your solicitor to prepare you a declaration of trust to set out your agreement between yourselves as to payment of costs and split of equity on sale.

MeOnMonSavExp

getmore4less wrote: »

Why not just double the mortgage and keep a bit of your cash back to pay your share.

keeps it simple and easy and truly 50:50

no need for any extra docs that will cost.

If the oh can overpay you can match.

Thanks. We might try something like this.