Can I come off a mortgage?

AuntyJean

I am living with a partner and we have a joint mortgage that started in May this year, interest only, fixed for 2 yrs. The mortgage is against the property where we live which was transferred into joint names about 5 yrs ago. The mortgage is for £30,000 interest only.

My partner and I have split and I will be moving out. Is there any way I can ask to come off the mortgage as I will no longer be living in the property against which it is held? Would I have to transfer my interest in the property back to my partner? (Trouble is I have spent about £8,000 on the property and he owes me £5,000).

withabix

I'd ask him to

a) sell the property and pay you what he owes and 50% of the increase in the property's value in the last 5 years (by independant valuation)

b) ask him to pay you what he owes you and 50% of the increase in the property's value in the last 5 years (by independant valuation)

c) get a legal document drawn up by a solicitor confirming the value of your financial interest in the property (including the money he owes you) on the day you left the property.

THESE ARE JUST MY OPINIONS. I HAVE NO LEGAL QUALIFICATIONS, ONLY EXPERIENCE!

Bossyboots

Most mortgage companies will be unhappy about you coming off the mortgage as it halves their chances of recovery is payments are defaulted. They almost certainly would want you on the mortgage if you are on the deeds. Otherwise, if your soon to be ex defaults they have you to contend with if they want the house sold to foreclose which could mean they can only do that through court proceedings. It would seem the simplest solution would be for him to see if he can re mortgage in his name to pay you what he owes you plus your share of the equity and then you transfer the property to him.

greenwich

Don't even think about doing this yourself. You need a solicitor and you need one right now!

zzzLazyDaisy

greenwich wrote:

Don't even think about doing this yourself. You need a solicitor and you need one right now!

Definitely good advice. To start with, there are two ways in law that a house can be held in joint names, with very different consequences if the house is sold and the proceeds allocated. You need a solicitor to look at the deeds and to explain things to you (s/he can get a copy of the deeds from the land registry).

Most houses held in joint names with a partner are held as 'joint tenants' which means that you are entitled to half the value of the house after the mortgage has been paid (not just half the profit over the past 5 years). If the house is held as 'tenants in common' you will be entitled to whatever share was stipulated in the deeds when the house was put into joint names.

On top of that, you should also get back the money he owes you from the proceeds of sale, though if he disputes that he owes you this money, you would have to prove it was a loan and not a gift, which may not be easy.

Now that you have moved out, the law can force a sale. But in reality, this isn't easy, especially in a stagnant market with a reluctant seller living in the house. My former home was held in joint names. It was on the market for 18 months mainly because my ex was living there and being obstructive. A few months ago he moved in with his lady friend down south, and 'lo and behold', suddenly became keen to sell the house. We now have a buyer and he is the one who is pushing for a quick sale :rolleyes:

Alternatively, he may choose to raise the mortgage and buy you out.

But you need to do something, because you are jointly responsible for the mortgage payments. If he defaults, they can come after you. If you are in a stronger financial position or simply easier to find, they can come after you for the whole lot, not just your 'share'. It is unlikely that they will take your name off the mortgage while you remain on the deeds. Also, it could affect your ability to get a mortgage in your own name. I did manage to get one, but many lenders will not lend to someone who is already jointly responsible for another mortgage.

See a solicitor, ask around and get one by recommendation if you can, but do it tomorrow.

good luck

Daisy

MarkyMarkD

If your partner's income is sufficient to cover the whole mortgage, the lender will probably let you off it.

So then you'd need him to:

(1) buy out your interest in the property at half its current value, adjusted for the relative amounts you've each paid in; and
(2) get the mortgage transferred into his single name.

If he hasn't got the income to cover the mortgage on his own, you are not going to be able to get released from it unless he sells the house ... so that must be what you request him to do if the first option fails.

zzzLazyDaisy

MarkyMarkD wrote:

If your partner's income is sufficient to cover the whole mortgage, the lender will probably let you off it..

Unfortunately it isn't as simple as that. It is unlikely that the lender will release OP from the mortgage while she is a joint owner.

The point of a mortgage is that the house is mortgaged to the lender as security for the loan. In the event of a default, the lender can force a sale of the property and get its money back. In the case of a jointly owned property, it can only do that if both owners are party to the mortgage. The fact that his income is enough to cover the mortgage now, is no guarantee for the future. There is simply no incentive whatsoever for the lender to release her while the property is jointly owned. I would be very surprised if they would agree to this.

So what this means is that the wole process of transferring the property into his name and getting her name off the deeds and the mortgage must be done at the same time. This will mean him re-mortgaging the property, not only to put the mortgage in his name, but probably also to raise the funds to buy her out.

Of course you are right, in that if he doesn't have enough income to obtain that level of mortgage on his own salary, then the house will have to be sold and the proceeds divided. Although if the house is held as 'joint tenants' it is not correct that the share of the proceeds depends on who contributed what, it isa straightforward split of the proceeds after all debts and expenses have been paid (this can be different if the house is sold in the context of a divorce, but as I read it, OP is not married to the other joint owner?).

The taking into account the relative contributions would be the case if the property is held as 'tenants in common'. This is less usual, but sometimes happens if the owners are not married. This is why OP needs to see a solicitor straight away.

MarkyMarkD

Err, that's what I said, Daisy.

He would need to

(1) buy out your interest in the property at half its current value, adjusted for the relative amounts you've each paid in

You keep suggesting remortgaging. That's simply NOT necessary. The existing lender will be very likely to happily lend the extra money to buy out the partner, and organise everything as a transfer of equity. Remortgaging is likely to involve a higher level of costs than doing a straightforward transfer of equity - particularly if the mortgage product itself has penalties attached.

Any decent solicitor would recommend the property being held as tenants in common, if the parties are not married.

AuntyJean

Hi guys and gals, need your advice yet again please.

Still stuck living in this house. We are now leading almost separate lives but this is not an ideal situation.

This house (house 1) was his inheritance. The property was put into joint names several years ago. The interest element of the mortgage on it (£30,000) has been paid to date by me with some contribution from him until February. As you will see from previous post I have also paid a lot of money on home improvements (without contribution from him). In the meantime he has borrowed from me on a regular basis which has now built up to over £9K. I have paid ALL the bills on this house (H1) for over 9 years. I pay for everything including the food. He has now been out of work for 10 months with an odd job here and there. I am now eating rapidly into my savings to keep up with all the payments. There is no chance of any holiday or anything and I am constantly worried in case something breaks down (eg cooker, freezer) as I no longer have funds left to replace or repair these. I am even paying to run the car he drives round in! He says if I sell it he won't be able to go to work. But, I also insist he gives me a lift on occasions (eg to work if my lift is not available), so I consider these costs as the equivilent of taxi fares. Car is worth less than £1,500 now.

I cannot get another mortgage as my ex wanted to sell our marital home so I ended up buying him out and putting a tenant in. She has more problems with family than I do and the rent exceeds the mortgage interest payments and helps me keep this house (H1) going. The mortgage on that property is £80,000 (BTL). H2 is solely in my name as is the mortgage. I also intend to live in that house or sell it when I retire in 14 years time (at age 65).

The problem is I am stuck here. It is a nice house worth about £160K. If I were to leave (eg rent a flat) the mortgage company would force a sell and he would be homeless. Besides which renting is wasted money in my eyes. Kicking my tenant out (of House 2) is NOT an option at present.

Ideally, I would like to buy him out and kick him out. He would be happy for me to do that provided I 'drip feed him' the cash as he knows he would blow it in one go.

As I have one mortgage for £80K and a joint mortgage for £30K with an average income I cannot see how I can afford to buy him out. Has anyone any suggestions?

I feel totally trapped and with only 14 working years to go I just want to be in a position where I actully own a house without any mortgage when I retire.

I don't want to consider seeing a solicitor until I know my options.

Any suggestions please?

HelpWhereIcan

AuntyJean wrote:

Ideally, I would like to buy him out and kick him out. He would be happy for me to do that provided I 'drip feed him' the cash as he knows he would blow it in one go.

This 'man' needs to grow up - if you buy him out, you buy him out. Any steps he takes to stop himself blowing it all in one go are his responsibility.

Make him an offer for his share taking into account all the inequality in contributions to the mortgage, home improvements and household expenses; what he does with the money is up to him, at least you will get rid of the financial mill stone that he seems to be.

AuntyJean wrote:

As I have one mortgage for £80K and a joint mortgage for £30K with an average income I cannot see how I can afford to buy him out. Has anyone any suggestions?

See a broker. You will probably find that the way that they do things is to ensure that H2 is on the best buy to let deal they can find for you. If H2 is currently on a repayment mortgage, it may be worth switching it to interest only with the option to make overpayments once your financial situation improves.

If H2 is on a buy to let (or even just let), most lenders will ignore it when calculating how much you can borrow for H1. You may be surprised at the strength of position this could put you in when making an offer to your ex.

AuntyJean wrote:

I feel totally trapped and with only 14 working years to go I just want to be in a position where I actully own a house without any mortgage when I retire.

I don't want to consider seeing a solicitor until I know my options.

Any suggestions please?

Act now. See a broker and make sure that H1 is put on a repayment mortgage. If this means having H2 on interest only for the time being, it will at least mean that the house you plan to live in now is mortgage free and, at worst, H2 provides an income net of mortgage payments. Once things have settled, you can switch H2 to repayment to get that paid, or even H1 back to interest only if you plan to sell it.

A broker will be able to tell you how much you can offer your ex within an hour. How generous you are with him will be up to you, remembering that he sounds like he just wants the cash and out and has contributed nothing for so long. You are the one in the position of strength - don't let this t***'s games get you down. You may be surprised at how quickly things can move once you know what you can do.

Hope this helps

AuntyJean

Thanks, HelpWhereICan,

Both mortgages are on interest only. I reduced the H1 one from £35K to £30K when we remortgaged 18 months ago and have been putting £155 pm into an ISA since that time (managed fund I think - my broker arranged it). So I have only been paying the interest on the two mortgages.

When I took on the H2 mortgage my broker told me the maximum amount I could borrow was only around £110K and that the £30K joint mortgage would be taken into consideration as a whole. Hence the reason why I do not think I can get any more.

As H2 is on a buy to let the interest is slightly higher. Also just completed my first tax return which was at a loss so have carried forward the balance of loss to offset against next years tax return.