Help me! Equity or Gift.... it's complicated!

Katy1980

Hi there


My partner and I currently live in a house (that we have recently sold - STC) which is in a joint mortgage. We are buying another house which has to go in just my name (because my partner has been a company director for under a year - hence no accounts/proof of earnings - so new house is going in just my name). I also am a Director, but I have three years of solid accounts which we've given to our lender (who is a main street bank) who have so far made an agreement in principle.

House price 290k - 88k deposit (from equity from our current house) which leaves a 202k mortgage in my name only (202k is an amount I can only JUST borrow!)

My solicitor has said that because I'm using 88k equity from our joint house sale and putting it into my single application then half that equity has to be considered a "gift" from my partner in the lenders eyes.

HOWEVER! As my partner will be living with me in the new property - does that mean she is considered an "interest" in the property? This (I have heard) means that most lenders will say no to my mortgage. Can my partner just sign something to say she wants no financial involvement or is our house slipping away?

All searches are in process and many fees have been paid. I'm having huge anxiety about it all.

Surely many people have this situation where they have a joint mortgage and then remortgage but have to do it in one name - hence use the joint equity in the new house? We are not married or anything - but have been together 11 years.

I've got this worry that they'll send the offer through - then they will ask my solicitor for proof of deposit - then my solicitor (who's insisting on pointing out the deposit is from our joint sale - so half of it is considered a gift) may ruin this for us!!

I can't believe there's so much red tape - especially when you have a nice, solid 30% deposit!

Please help us!


Many thanks

amnblog

Oh dear- what has the broker said?

Katy1980

My mortgage adviser is on holiday - But my application is forwarded to their admin people now that its in the application process (underwriters, survey etc) so I'm not sure of the knowledge of the person who's now dealing with it.... She said "Nah, it's equity, it doesn't matter" but my solicitor is saying "the lender will see that as a gift" - meaning (because of the fact my partner will be living with me) will mean she could be considered an "interested" party (which the mortgage company won't like/allow).

This must happen all the time though? (couples going from joint to single app - who are still together but doing it for the sake of lendability - with a deposit from joint equity...)

kingstreet

This situation should have bee checked with the lender prior to submission of the application.

Katy1980

I've emailed my mortgage advisor to ask if she made clear the deposit I have is from equity from JOINT mortgage. She's on holiday - so I have to stress for weeks!

One thing is that we are unmarried and I can pretty much prove that all overpayments we made on our house were actually paid for my me. The only reason we have so much equity is thanks to me paying large chunks off - yet now I feel like I'm being punished for it (really wanted to insert swear word then!)

My partner appreciates that fact and said she'll happily sign a document to say she has no interest financially (but because she'd be living in the new house - the lender may say that IS considered an interest because may have some sort of rights by living there...?)

amnblog

Kingstreet is right. This should have been flagged up and dealt with from the get go.

It may have been, but if your adviser is away you are reliant on someone sensible being left working in the business to handle this for you. The administrator you refer to here does not seem to be it.

Is there a manager at your mortgage brokers business that can sort this for you?

Katy1980

My mortgage advisor works at an Estate Agents - so she's the only one there. I need to find out who/where her managing offices are - but I can't ask her as she's away! Arrrrgh!

amnblog

Who is the EA? Are they a large chain?

amnblog

Katy1980 wrote: »

This must happen all the time though? (couples going from joint to single app - who are still together but doing it for the sake of lendability - with a deposit from joint equity...)

This is just what the lender does not want Katy.

They need to know who they are actually lending to and who is putting in the cash.

A scenario where you have a borrower relationship with the Lender and you and your partner sort the rest out between yourselves is the last thing they need.

Mortgage_Mark_2

Which agent?

amnblog

Who is the Lender?