Mortgage Payout to Ex Partner

Curiousone_2

A friend’s partner left him a few days ago, no hope of reconciliation.
Their new Fixed Rate deal with same provider starts in a few weeks, on 1st Nov.
Should he cancel the new agreement immediately, and go onto variable rate in the meantime? 

He wants to take on the mortgage himself (partner has too low an incone) and is worried there would be penalties if he allows new deal to go through? 

Exodi

Can he afford to take on the new mortgage himself?

Assuming he meets affordability and they agree on the buy out amount, he would consult with a solictor to conveyance a transfer of equity between him and his ex.

In reference to the mortgage, this is most commonly done through a further advance/additional borrowing... essentially a (smaller) second mortgage that has it's own rate and term (unless he has the cash available to buy the ex out without additional borrowing). He would need to pay a solicitor for the TR1 (transfer of equity) and may have to pay a potential (relatively insignificant) change of party fee.

In this scenario, it would make sense to renew your fix, as it doesn't matter that you have a fix if you are changing parties, you are not cancelling the deal.

If he doesn't meet affordability (he should really double & triple check with a lender), then it might make sense not to renew the deal, as if the house needs to be sold and he's in a fixed deal, he'll be liable to pay ERC's, which could be several % of the balance, potentially thousands or tens of thousands of pounds.

Brie

Does the ex agree to the transfer of equity?  He can't just pretend the property is all his if it isn't. And even if it is the ex may still be able to claim a portion depending on their actual relationship.

gwynlas

If they are both named on the mortgage then he will need to inform lender of any changes to relationship as they are both jointly liable and will be linked in credit files.

If they are married or in a civil partnership then there would need to be a financial settlement on divorce.

Unless he meets affordability criteria and can afford to pay ex their share of equity he cannot assume that he will be able to remain in the property

eschaton

I’d be cancelling if possible and deal with it afterwards. The new deal is going to lead to ERC”s that would apply if he wasn’t successful in taking the mortgage on his own.

He can fix again if he does get the mortgage.