Mortgage problem

T

The pledge

Vital Reserves Team
My friend is buying a property with her partner. She is selling her current property and this will account for almost two thirds of the equity on the new house. She has no mortgage. He is selling his property and wants his mortgage to be transferred to the new property. However the lender insists that my friends name be added to the mortgage as the deeds will be in joint names. She doesn't want to do this as
A- she is contributing two thirds already and
B- she doesn't want to have her name on his mortgage if things don't go to plan or something happens to him.
Anybody got any suggestions of a way around their predicament .
 
Name on the mortgage is a deal breaker for me if they are thinking about it like this in the first place. She's dead right to put the brakes on. Are there civil partnership pre-"nups" which could spell out liabilities?
 
I used to work for a bank and all home loans/mortgages had to be in the name of all owners of the property in order to get the low mortgage rates and term as long as 25 years or more.

You can get loans with a higher interest rate and shorter repayment term which can be in the sole name of one of the parties and repayment would therefore be their sole responsibility. However, both parties would need to sign a third party mortgage/charge form over the property to secure his sole liabilities, so the property is still at risk of repossession if repayments are not kept up.

I would urge your friend to consider long and hard about this arrangement if she already thinks there is a possibility that things might not "go to plan". Having no mortgage is an enviable situation and suggests she has been prudent in the past.

If her partner's mortgage is relatively small, the lender will be more likely to be patient if repayments are missed. She can also cover the risk of something happening to him by taking out life insurance or even unemployment and/or sickness insurance
 
Good post Bluenose. I think a "pre-nup" type option may be available to protect her lump sum. Get proper legal advice as large sums are involved
 
Having worked for a bank, I do not see what the bank's grief is.
They are being asked to fund an amount, presumably with a backing of the 'full' value of the (shit, can't remember the technical term!) and if they have the details of the remainder of the acquisition of the property, there should be no problem whatsoever.
It does sound to me that a finance individual has no experience of a 'joint and several'.
 
they are both in late 50s and intelligent people. But as we all know going out together and seeing each other twice a week , is a bit different to living together . She has her own kids so obviously wants to protect their inheritance. As posted she will have to look into pre nups for some sort of agreement to protect her share .
 
The pledge said:
they are both in late 50s and intelligent people. But as we all know going out together and seeing each other twice a week , is a bit different to living together . She has her own kids so obviously wants to protect their inheritance. As posted she will have to look into pre nups for some sort of agreement to protect her share .
Click to expand...

Having worked in mortgages, as well as studying contract law at uni briefly, I wrote a cohabitation agreement for me and my mrs when we lived together and before we were married. It was for much the opposite reason, she couldn't go on the mortgage as she had bad credit at the time, but wanted to maintain her share of the deposit, money spent on full reonvations and any subsequent increase in value as a result of the renovations.

Worked well for us, although thankfully we never needed to exercise the agreement, as we are now married.

Obviously your friend's position is slightly different though but I think a cohabitation agreement would be worth investigating. However it still doesn't give you a legal charge over the property so actually it might not give the legal safety your friends are after. I am not sure if your friends have a good option to be honest.

Always worth getting lawyers to check over them, and each party requires their own lawyers, just for piece of mind also.
 
The pledge said:
My friend is buying a property with her partner. She is selling her current property and this will account for almost two thirds of the equity on the new house. She has no mortgage. He is selling his property and wants his mortgage to be transferred to the new property. However the lender insists that my friends name be added to the mortgage as the deeds will be in joint names. She doesn't want to do this as
A- she is contributing two thirds already and
B- she doesn't want to have her name on his mortgage if things don't go to plan or something happens to him.
Anybody got any suggestions of a way around their predicament .
Click to expand...
My daughter had a similar problem when she purchased a property with her fiance.

She put 50k in he put 4k in!

https://www.gov.uk/joint-property-ownership

The paperwork with the solicitor says she owns a percentage and the fiance owns a percentage.

It was easy to do.
 
wxgill said:
My daughter had a similar problem when she purchased a property with her fiance.
She put 50k in he put 4k in!
https://www.gov.uk/joint-property-ownership
The paperwork with the solicitor says she owns a percentage and the fiance owns a percentage.
It was easy to do.
Click to expand...

I think WXGill is only referring to the ownership of the shares in the property rather than responsibility for the mortgage.

It is possible to divide the ownership as any percentage you like (75%-25%, 65%-35%, etc). The link he used refers to that as "Tenancy in Common" but it also used to be called by another name which was "Holders in Undivided shares". That is probably a clearer description. Your friend can ask their solicitor to arrange this at the time of the purchase as opposed to "Joint Tenants for Own benefit" which is the most common type of title where in the event of the death of one party, ownership would pass to the other automatically without the need for probate.

In the case of "Tenancy in Common", in the event of her death, her share will form part of her estate instead and pass on in accordance with the terms of her will. The lender will want the inheritor of her share to take her place on the mortgage when transfer of part ownership takes place or otherwise the outstanding sum will need to be repaid at that point. In reality, the partner would probably buy out the inheritors share (if he could afford it) and take over the mortgage or they would both want to sell at that time.

Obviously, the bottom line is that the lender would want to take possession of the whole property to sell/obtain repayment in the event of default so all parties with an interest in that property would still need to sign and be responsible for the mortgage.

In the case of the mortgage over his current property, her partner is the sole owner so is the only person that would have needed to sign the paperwork and be responsible for the debt.
 
Last edited:
As GB has said, preserving her part of the property through the tenants-in-common approach is one thing but if the lender insists on both names on the mortgage agreement I guess the only way out is to have an agreement, as AK has recommended, stating that in case of default the property has to be sold. That's assuming any debt and arrears is no greater than his share in the property; so, she'll have to keep tabs on him in case of default but as a joint borrower she'd know what was going on.
 
Last edited:
Is there another approach ? ( to reduce the need for a forced sale)
If he defaulted - or went away - could she afford to take on the mortgage ?
If so, then a simultaneous transfer of the liability (mortgage) and asset (his share) would put her in control - triggered by an "event of default".
Surely lenders would much rather a hassle-free mortgage transfer than a lengthy forced sale ?

Death and inheritance for her children is a different matter.
 
Perhaps you should suggest to them that they have a word with Scally. Apparently he can disappear loans in no time!
 
You must log in or register to reply here.