4 names on deed, 2 on mortgage. Problem?

tdh739

Hello,

I'm currently going through the purchase process on my first property. The situation is a bit odd, perhaps, but I don't imagine unique.

My partner and I are going 50/50 with her parents. We're taking out a mortgage for 50% of the property value whilst they are paying for the remaining 50% in cash from existing savings.

Seems simple enough, I'd have thought, with an agreement from the solicitor on who owns what proportion etc.

However, the estate agents is refusing to recommend us as buyers since the names on the mortgage agreement are not the same as those we would like to have on the deed, claiming that these MUST be the same and there there is NO WAY around it. Surely there are lots of people buying a proportion of a property and taking out their own mortgage?

Is the agent correct or should I stand my ground and suggest that they're just being difficult to make their own life easier?

Thanks for any advice you can offer, and if any of the above is confusing please let me know and I'll try to clarify.

Cheers! :beer:

Gillybean

I've had a bit of experience of this recently and I think your EA's are right.

Basically our residential property is in 3 names, our BTL is in 2 names. We've recently remortgaged our BTL and the mortgage lenders got everything the wrong way round and refused to give us a mortgage because there were three people named on the deeds and only 2 people applying for mortgage. We pointed out they were looking at the deeds for the wrong house and it all got sorted.

So in answer to your question, I don't think there's any way round it. But I could be wrong.

seven-day-weekend

I think the names on the deeds and the names on the mortgage have to be the same. I believe you have to be jointly and severally liable for repaying it.

If you default on the mortgage, and your parents' name is not on it, how do the bank get their money/house back? However, if you don't default, then the fact that there names are on the mortgage doesn't matter, does it?

LandyAndy

I'm a little surprised your solicitor and the lender don't know the answer to this!

sparklymessygirl

Yes - the only way a property can be mortgaged is if all legal owners act unanimously so you all have to sign the mortgage document.
Make sure you know whether you are going to be tenants in common of the equitable interest or joint tenants.

Sparkly

tdh739

Thanks for the info, very much appreciated.

I'm surprised that it's so restrictive. I can understand the lender's concern, that if I default on the mortgage they're stuck with 50% of a property they can't necessarily cash-in. However, I'd suggested that we agree to allow the lender a charge on the property such that, if this did happen, they would have every right to demand a sale.

Andy - my agent and solicitor may way know the answer, but I often took to MSE for consumer input. In my experience interested amateurs are often more clued up than practising professionals.

So, even though 2 of the co-owners are not borrowing from the lender, they have to sign a mortgage agreement?

What, then, do these investment coops do when they club together to purchase property. Since they will be in different circumstances a particular mortgage might not be best suited to them all. Surely they are not all forced to sign up to the same mortgage deal?

My mortgage application has already been submitted and approved, but now that more names need to be added, I'll be less than impressed if there is additional costs - I can feel another mortgage fee coming on since it's effectively a reapplication...

The thing that confuses me is that a mortgage is just a secured loan, and where the money comes from should be of no interest to the agent. This seems uneccesarily restrictive.

Again, thanks for your thoughts.

Doozergirl

tdh739 wrote: »

What, then, do these investment coops do when they club together to purchase property. Since they will be in different circumstances a particular mortgage might not be best suited to them all. Surely they are not all forced to sign up to the same mortgage deal?

The thing that you describe is where people 'club' together to buy many properties to obtain a larger discount. eg. 30 sets of people club together to buy 30 flats. They are not 30 people buying one flat. They are just using the power of bulk-buying.

It makes perfect sense that all people on the deeds are on the mortgage as the loan is effectively secured on the property, not exactly on you as individuals, although your ability to pay obviously plays a big part.

It does make sense why all parties should be on the mortgage. Why would a mortgage company want to go through the lengthy process of complicated contracts, covenants and legal wrangles when they can simply request that their charge on the property takes priority over everything, even to the point of being able to sell it on at less than the market value of the property, should it come to repossession.

It might be a bit awkward now with your mortgage lender as some mightn't accept four people on the mortgage at all. I don't really understand how you managed to apply for the mortgage in two names; if you explained the situation, it should be obvious to any professional associated with property that you couldn't do this!

tdh739

Doozergirl wrote: »

It might be a bit awkward now with your mortgage lender as some mightn't accept four people on the mortgage at all. I don't really understand how you managed to apply for the mortgage in two names; if you explained the situation, it should be obvious to any professional associated with property that you couldn't do this!

I'm concerned about the last sentence. My IFA was fully aware of the situation, but said nothing about the likelihood of recent events. Looks like I'm going to be on the phone a lot this weekend.

Why would there be a limit to the number of people on a mortgage?

I'm thankful for all the info, and feel suitable informed to approach the relevant parties, but for my peace of mind, what are the issues I should address and what stance would you suggest I take with each?

I should have researched this circumstance to greater depth, and I am sure any resolution will only hurt myself, though given that I was not advised against it from my IFA or lender, I wonder if I have any case otherwise?

mountainofdebt

Whilst I appreciate that your OH's parents are putting up 50% of the house price have you discussed what would happen if they needed their equity from the house for say nursing care?

If you haven't discussed this between the four of you now then I suggest you do before you go any further.....as this could all end in tears.

tdh739

I appreciate and understand your concern, however their affordability is ultimately their own decision and risk. Whilst this may seem cold it's no less true. However, should it come to a point where they were desperate, I should perhaps mention that the property is valued at £95,000 and I could (and perhaps more importantly, would) afford to buy them out myself, discounting the O/H's income.

I know circumstances can change and problems arise from the horizon, but I don't think their needed monies in the short term is one of them. Incidentally, this is a BTL investment, not residential.