Do you need to remortgage to do a transfer of equity?

Swansea123

My husband and I have separated and I'm in the process of removing his name from the mortgage and doing a transfer of equity. My lender is telling me I need to remortgage but I am not borrowing anymore or extending the term.

I have 3 years left of my fixed rate and have a low interest rate currently. By remortgaging it will add £200 a month on to my current payments.

My lender's website doesn't have any information on transfers of equity, but others do and they state that you stay on the same terms.

I've queried this with my lender and they've said I have to remortgage and it's now industry standard practice - which doesn't seem to be the case on other websites.

There is nothing stated on this in my current terms. It says I can port the mortgage if I move house. It makes no sense that I can keep my current terms if I move but not to remove a name from the mortgage.

Does anyone have any advice on this or on how I could escalate the issue?

sammyjammy

If you remove a name you need to remortgage, they need to know that you can afford the loan by yourself, if you are doing a transfer of equity how are you doing that if not by remortgaging for the existing loan plus what you need to pay him?

DullGreyGuy

Its the change in the debtors that will trigger the need to remortgage, whilst you aren't increasing the loan nor the duration you are reducing the people they can chase in the event of a default and so they need to be sure its sappropriate for them to lend to you as a sole applicant rather than the two of you as a joint applicants 

Brie

I would assume that it was both of you who took out the mortgage and because it's only going to be you going forward they need to re-evaluate if it's affordable to you.  This would be different than the 2 of you moving and taking your mortgage with you both.  

Personally I would bring it to their attention that the T&Cs don't say a thing about transfer of equity and point out that the industry standard practice says it would be at the same terms.  To do otherwise might be construed as discriminating against women (assuming you are a woman) because it is often women who will want to stay in the family home and have the (soon to be ex) husband off the paperwork.  

Obviously you would still have to provide proof of being able to afford the mortgage on just your wage.  And obviously having it at a lower interest rate would make that easier.  

So - contact them and say complaint due to being financially disadvantaged for them not following industry standards (reminds me a bit of those current Nationwide ads on TV....)
If that doesn't work then ping them with potential press coverage of their discrimination against women when they don't follow industry standards.  And on International Women's Day too!!!

bluelad1927

Brie said:

If that doesn't work then ping them with potential press coverage of their discrimination against women when they don't follow industry standards.  And on International Women's Day too!!!

It isn't discrimination against women and to say so completely devalues those who suffer true discrimination and the importance  of International Women's day

Swansea123

I understand that affordability and credit checks need to be carried out to ensure I can take it over in my own name,, and I've already passed the affordability stage.
But can they force me out of my fixed rate? They've told me they will waiver the early repayment charges, but ultimately are moving onto higher interest rates

Swansea123

sammyjammy said:

If you remove a name you need to remortgage, they need to know that you can afford the loan by yourself, if you are doing a transfer of equity how are you doing that if not by remortgaging for the existing loan plus what you need to pay him?

I am only taking over the amount as it stands on the mortgage. I'm not borrowing more to buy him out as I have other sources to cover that

kingstreet

A transfer of equity will result in the removal of a party from the ownership and from the legal charge and as the legal charge/mortgage deed is the 'mortgage', the term "remortgage" can properly be used in this context. However, I don't see why the home loan has to be changed, other than to reflect the removal of a borrower. IMHO the T&C should be continued and any attempt to replace a good old rate with a poor new one should be resisted and become the subject of a complaint.

Swansea123

kingstreet said:

A transfer of equity will result in the removal of a party from the ownership and from the legal charge and as the legal charge/mortgage deed is the 'mortgage', the term "remortgage" can properly be used in this context. However, I don't see why the home loan has to be changed, other than to reflect the removal of a borrower. IMHO the T&C should be continued and any attempt to replace a good old rate with a poor new one should be resisted and become the subject of a complaint.

Thank you, that's the advice I've had elsewhere. I am going to take it further and escalate the complaint.

I feel like they are trying to fob me off saying its industry standard practice, when other lenders' website specify that you'd stay on the same terms, subject to affordability and credit checks 

Hoenir

Personally I would bring it to their attention that the T&Cs don't say a thing about transfer of equity and point out that the industry standard practice says it would be at the same terms.  

Mortgage contracts normally contain a due on sale clause. The act of transferring equity can be taken as triggering same. 

SilverSix

Yes, you may find that any ERC's are waived though due to the nature of the transaction.