Is there an ERC for changing the names on the mortgage?

MandyMcG

My partner and I are separating. We are currently jointly named as mortgagees on the mortgage documentation. My partner is anxious to have her name removed from the mortgage deeds, so she can buy somewhere new, unencumbered by existing debt. I am happy to take on the mortgage in my own name.

However the issue is that the ERC attached to the mortgage is huge, at 5% of the total outstanding value of the loan.

Is it likely that the lender (in this case Birmingham Midshires) will try to charge me the 5% ERC fee for removing my partners name ? What tactics would you suggest I should use?

Thanks all

Mandy

MortgageMamma

Hi Mandy

NO you should be able to keep the same product, as you are not technically repaying the mortgage there should be no ERC.

However, affordability is something entirely different and absolutely essential and pivotal in you being able to achieve a successful transfer of equity. Can the remaining spouse support the mortgage comfortably with their income ? this is the question BM will ask and you will be subject to their usual affordability criteria

MM

DaisyFlower

There should be no ERC but there will be an admin fee, think I paid around about £130 9 years ago when I needed to do this.

MandyMcG

MortgageMamma wrote: »

However, affordability is something entirely different and absolutely essential and pivotal in you being able to achieve a successful transfer of equity. Can the remaining spouse support the mortgage comfortably with their income ? this is the question BM will ask and you will be subject to their usual affordability criteria

MM

Thanks for this MM.

The sitatuation is that the mortgage would be about 5 times my own current salary, but I have substantial savings that could be relied on to cover the mortgage.

The other option, I suppose, is to rent the house out, and I could move into rental in something much smaller for the remainder of the discount period.

Do you think BM would go for either of those suggestions?

MortgageMamma

could you not make overpayments with your savings to reduce the mortgage balance and hence be more in line with their affordability criteria?

The rental option could be viable, but in order to assess if it could work you need to get some locally letting agents in to give you a rental assessment, and then apply to BM for consent to let. Also ensure you stay within their lettings policy, they are no good for student lets, or houses of multiple occupation - you need to check the houses of multiple occupation rules with your local authority as you may need to apply for a licence if this is something you are going to consider.

HTH

MM

MandyMcG

Thanks again MM.

Are there any stamp duty implications that I need to consider?

MortgageMamma

i think it depends on whether married or in a civil partnership but could be wrong - have a look at this link it might help - but be on the safe side and check with solicitor as it really is a legal matter http://www.hmrc.gov.uk/manuals/sdltmanual/sdltm00210.htm

MandyMcG

Thanks again MM. Can anyone else advise on the stamp duty issues?

We are not in any sort of civil union, and bought the house as tenants in common. I will move to be the sole owner for mortgage purposes...

MortgageMamma

separations are always trying, I hope things go smoothly for you, sorting the finances can sometimes be the worst bit.

MandyMcG

Thank you so much MM, for your continued support.

I called BM yesterday, and they said that I could not transfer to a Buy to Let, but could re-apply based on my own earnings.

If I cash in all my chips to pay off some of the mortgage, I could come in just a whisker under 5 times my sole salary (inc an assumed bonus of £10k). Will this be enough? They would not give me a straight answer on the phone...

My annual bonus, which is not guaranteed, has run in the region of £10 - 15k over the past 3 yrs also. Will they accept this, or disregard it in their calculations?

Thanks all

MortgageMamma

Hi Mandy

I didnt realise the mortgage you wish to transfer was a buy to let. if so, then it should not really be your earnings that are considered but the rental income on the property. I am not really sure about transfer of equity on a BTL property but can look into it for you. Usually so long as the rent supports the mortgage it is not a problem with BTL. I think you need to take some professional advice. did you have a mortgage adviser who set uip the mortgage with BM for you?