Separation- Unmarried, mortgage

alm721

Hi, my son and their partner are separating. They are unmarried and have no children, but do have a house owned 50/50 as joint tenants with a mortgage. There is a small amount of equity in the house. My sons partner wants to remain in the property and has offered to buy him out by taking out a loan. She has offered him an amount which seems fair and my son is happy with this plan. 

My question really is how do they proceed with doing this? I assume the mortgage company will need to assess her ability to repay the mortgage on her own and be in agreement to this, but is it just a case of ringing them to ask? Also do they need to have a document severing financial ties drawn up, or is this just for separating married couples? He hopes to use the money as a deposit for a house of his own if that makes any difference. 

Thanks for any advice

secla

She has to remortgage the property herself so yes she will need to be assessed for affordability. 
Also needs to take into account any early termination fees if they are in a fixed rate mortgage i guess they would have to split the cost of that 50/50

Hoenir

alm721 said:

 I assume the mortgage company will need to assess her ability to repay the mortgage on her own and be in agreement to this,

The affordability issue on just a single income is often a major challenge for separating couples. 

jackieblack

secla said:

She has to remortgage the property herself so yes she will need to be assessed for affordability. 
Also needs to take into account any early termination fees if they are in a fixed rate mortgage i guess they would have to split the cost of that 50/50

If on a fixed rate it might be better to ask the current lender if they will allow her to take over the mortgage in her sole name with a transfer of equity and keep the current fixed rate product, avoiding the ERC. Affordability will be key.

gwynlas

As previous posters replied she  will need to be assessed for affordabily and potential rate increases. Mortgage rates have improved but she might need to take one out over longer period in order to afford monthly payments. Your son will need his name removed from mortgage  utilities and council tax in order for her to qualify for single occupant status. If he moves into another property either rented or owned he needs to register for electoral roll asap.

bluelad1927

The fact that a loan needs to be taken out to pay the small amount of equity suggests that affordability is likely to be an issue