Transfer of Equity - Confused!

Melissa909

Hi All,

I am looking for a bit of advice on the following:

My partner and I have moved in together and are planning on getting married soon.  I have moved into his house (value 375K he has 100K equity) I have sold my house and have the proceeds (100K) in a bank account.  We are in the process of doing a transfer of equity whereby we will own the new house 50:50 as tenants in common with a deed of trust and wills to specify what happens when we die ect.

All is good, but I’m failing to understand one part of it.  We have agreed that my 100K will go onto the mortgage so we have 200K equity and 175K mortgage that we will both be liable for.

On completion the solicitor says I pay the money to my partner as I am purchasing from him. What I don’t understand is why this doesn’t go directly to the mortgage provider?

I trust him completely to pay the mortgage off with this money, but in the back of my mind I don’t understand what happens if he doesn’t. Surely, I am purchasing the debt?

Say it doesn’t get paid off and he keeps the money.  We later chose to sell the house and split the proceeds 50:50 as per the trust.

After paying back the outstanding mortgage I would get back 50K and he would have 50K plus the 100K. 

Am I miss understanding something here?

Many thanks for your help

wend33

I would guess that what your solicitor means is that you are purchasing a share in the property from your partner but that the solicitor will take those funds and forward them to the lender to reduce the amount outstanding on the mortgage so your partner won't actually get the money.

AdrianC

He is repaying a £275k single-borrower mortgage, and you are jointly taking out a £175k joint-borrower one.

The lender is going to want £100k... But they're going to want it paying by him, not by you, simply because he is their current customer. You are not.

Melissa909

Hi thanks for all your comments.  As I understood it I have been approved to be on the existing mortgage as it is so 275K but joint.  There are no fees with this particular product so we can pay off the 100K at any time. So technically the lender is not going to be asking for the 100K.  Have we gone about this in the wrong way? 

AdrianC

If the lender aren't getting the £100k, then the mortgage debt is still £275k...

Melissa909

It's OK we have spoken to the solicitor, I can pay directly to the lender and provide evidence to the solicitor.  Thanks for all your help.