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Dealing with joint mortgage on relationship breakdown?
LouisV-W4
Posted: 04 October 2012 12:38:25(UTC)
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This must be a very common problem.

When a 'tenants in common' co-habit relationship ends, and a joint mortgage is involved, the usual options are sell or, transfer of equity, which typically involves transferring the joint mortgage into the name of the person remaining in the property.

If you opt for the transfer of equity and mortgage route, what happens if the mortgage company refuses to transfer the mortgage?

It follows you are unlikely to be able to re-mortgage elsewhere because your lender has 'turned you down' and in doing so, left a stain on your credit file, despite having a 999 credit rating and never having missed a payment.

Would readers please comment on the following if they have relevant experience/expertise and/or can advise me on what to do next:

Could we draw up a document similar to a Declaration of Trust, whereby one party assumes the full responsibility for servicing and discharging the joint mortgage.

If my ex-partner subsequently wishes to buy another property, how would a lender view the fact she has mortgages elsewhere, albeit she is not legally responsible for the payments/liabilities?

Many thanks in advance for any assistance.
SJB
Posted: 05 October 2012 12:51:52(UTC)
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My daughter is going through exactly this issue. What is being discussed with the soliciters is for her to continue paying the mortgage. The mortgage company is OK with this, providing her husband's name remains on the mortgage. My daughter is offering to indemnify any default to the mortgage, providing he makes no claim on the property. So far he and his solicitor are agreeing to this, as we are also taking over £20,000 of debts he has racked up.

If he wants to take out his own mortgage, he can be provided with a letter etc. showing that whilst his name is on the mortgage he makes no contribution and is not liable for any default.

The intention, by my daughter, is to put herself and her two young children into the position where she can either pay off the mortgage (it's about £60,000) or develop a career that enables her to take over the mortgage.

I'm not saying this is a universal solution, but it seems to be one that is being worked on.

1 user thanked SJB for this post.
LouisV-W4 on 19/11/2012(UTC)
russell savage
Posted: 09 October 2012 17:56:41(UTC)
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Joined: 09/10/2012(UTC)
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hi louis


on your question regarding transfer of ownership and mortgages, it should be fairly straight forward to agree in principle a mortgage subject to confirmation of your details therefore a broker or mortgage broker should be able to ascertain who will do this without the need for a formal application anda possible refusal which as you mentioned would then have to be disclosed on any subsequent application


to answer the second and third questions it may well be that a flexible lender will allow an existing lender to separate but continue to guarantee but most will be reluctant and from a personal view, your ex probably wouldnt be that happy to guarantee and ultimately if you dont pay be responsible jointly with you for servicing the loan as you will both be equally and severally liable

With regard to further borrowing they will take into account the existing loans when calculating affordability on any new loan so your ex again would be severely restricted if the loan is of any substantial nature


hope this helps


Russell

reynalda heimil
Posted: 19 November 2012 11:23:47(UTC)
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Joined: 19/11/2012(UTC)
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Thanks for share this nice post. You have made number of good post.

East London Estate agent
LouisV-W4
Posted: 19 November 2012 12:35:39(UTC)
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Thanks to those who have responded. I'm surprised there were so few, as I'm sure this is a common situation.

Russell Savage - what if I could not obtain a re-mortgage, regardless of whether I could afford to pay it?

Concerning the other questions, I think you may have the wrong end of the stick. I am suggesting, as with SJB, that we have a legal agreement whereby she is absolved of all liabilities for the property and mortgage, and I will be wholly responsible in the unlikely case of default. Surely, the mortgage provider cannot force her to accept liability if there is such a legal agreement in place. She would simply invoke the Trust Deed, pushing liability back onto me. The only outcome would be re-possession or sale of the property, which has significant equity, so no real risk to her anyway.
akbar alizada
Posted: 16 May 2013 18:41:22(UTC)
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Joined: 16/05/2013(UTC)
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[[b]b]hi i have recently separated from my partner and we have a joint mortgage. after the separation i had moved out just for a week to sort things out,
when i returned the locks to the house had been changed and i could not gain access, i have tried to get in contact with her, but she is refusing to talk. i carried on paying for my half of the mortgage for about 5 months. then i found it impossible to carry on paying for the mortgage and pay for me to live somewhere so i got in touch with my bank and told them the situation and they said i can stop paying as long as the other party pays the full amount.
since i have stopped she has been paying the full amount.
but does this affect my rights when it comes to selling it in the future, do i get any money back esc...
LouisV-W4
Posted: 18 May 2013 09:39:48(UTC)
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Akbar,

Without knowing your circumstances, nobody can offer legal advice. However, regardless of who is currently paying the mortgage, you jointly own the property, and who has paid what will be considered in any final settlement. You must seek legal advice now.

It will help if you have a Declaration of Trust between you on the property, which should set out what happens if you split, but from experience, if someone is occupying the property and excluding you (which they are not permitted to do without an order), the law (Trusts of Land and Appointment of Trustees Act 1996) is very vague, and seems to benefit nobody except the lawyers.

A friend of mine was unable to release her investment in her home with her ex-partner for 2.5 years because he had moved his girlfriend into the house in breach of the Trust Deed, and was excluding her from the property. He pulled out of the sale of the house to a 3rd party for no reason in August 2010, then used every trick possible to prevent selling or buying it himself, until such time as my friend was so desperate, she accepted a very low offer from him in December 2012. She invoked the Trust Deed, but the legal costs were horrendous, and even though the court eventually made an order, her ex- simply said it was on the market but not selling. She had the largest cash investment in the property, yet the law has allowed her ex- and his wife to come out the big winners.

If he had stolen £100,000 from her, it would be a criminal offence, and he would be prosecuted. This was legal 'mugging'! How can that be justice?

A number of her friends just could not believe she was telling the truth about what was happening to her, because her story seemed beyond belief to most law-abiding people.

This story and your situation are very common, and there needs to be a public debate about this, especially with the recent changes in legal aid. Usually, it is the woman who suffers at the hands of the more financially powerful man (as in my friend's case). This is something a newspaper e.g. The Daily Mail, must take up as a campaign (I have written to them but had no response) because it is scandalous.

My friend 'owned' a house but had no regular income, and was therefore excluded from the legal aid system. Her ex- was earning £10,000 per month as a freelance 'consultant' to Lloyds Banking Group and could afford expensive legal action. Today, justice is available only to those who have no money or property whatsoever, and those who have sufficient money to instruct lawyers.

As a footnote, this couple is now being investigated by Bath Police for fraud against my friend in a different matter; something they have tried very hard to hide for 3.5 years.





SJB
Posted: 18 November 2013 18:20:30(UTC)
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Hello.........it's about a year since this thread was in operation but I thought I would just provide an update on what happened in my daughter's situation.

She is now divorced and the agreement she negotiated with her husband's solicitor was as described in my previous e-mail. An agreement was set up that her husband would have no financial interest in the property and he would have no say in if and when the property is sold or any profit. In return my daughter has take financial liability for the property and the mortgage. My daughter pays the mortgage and he doesn't make any contribution.

For the mortgage company, they require his name to be left on the mortgage as default, but my daughter indemnifies any default. The mortgage company are happy with that. The only other proviso is that my daughter has to repay the existing mortgage by 2024 so his name can be removed. She would then take out a new mortgage in her name and he would be a distant memory.

This arrangement was submitted to the Judge who agreed that, in their circumstances, is was sensible and agreed to it........divorce granted, goodbye to a pain in the ???!!??
LouisV-W4
Posted: 18 November 2013 18:57:54(UTC)
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SJB ...I'm very pleased that your daughter has resolved her situation favourably.

It does sound very similar to my own resolution, albeit I was not forced to go to court. However, it's reassuring to know that if such an arrangement were to come before a judge, it would be acceptable.
Len L
Posted: 16 April 2014 21:26:30(UTC)
#11

Joined: 16/04/2014(UTC)
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SJB - Many thanks for this info. I am in a similar situation to your daughter, having separated from my ex and agreeing that she keep the property, but having great problems in coming off the joint mortgage, to enable me to have a new mortgage to buy a new home. My ex doesn't have sufficient earning capacity to allow me to be released from the mortgage....can I check if this was the same problem as your daughter? Was this letter of indemnity easy to sort out? and did it mean that her ex could obtain a new mortgage to buy a place of his own?

Any help greatly appreciated, as this is proving a big headache for me and my ex, in what has been up to now a very amicable split.
pen
Posted: 21 April 2014 00:16:22(UTC)
#12

Joined: 21/04/2014(UTC)
Posts: 1

I have a similar problem and I do not know what to do as we dont have much money to consult a solicitor so if anybody has advice I would really appreciate it.
My boyfriend bought a flat with his ex, they split up (and it wasn't a good split) but she asked him to leave his name on the mortgage so it will be easier for her, this is 5 years ago. A year ago we asked her to start proceedings to take his name out of the mortgage as it is affecting us negatively and also shows that he owes another property when he doesn't. We have no idea what is happening because she is not very forthcoming with information, she ignores our calls and text and I just want this over. Any suggestions? shall we take her to court?
Please help.
Pen
SJB
Posted: 21 April 2014 10:13:01(UTC)
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Hello to LenL and Pen..........I'm glad you found my post helpful, but I would say that I'm not a solicitor or a mortgage expert, what I posted is just an account of what we were able to do. So, here's my thoughts on the subject:

LenL............mortgages are all about affordability. If the mortgage company do not believe your ex can afford it by herself, I can only imagine that they will not authorise your name to be removed. I would think that the only way that could happen is if the property is sold, the mortgage repaid and you and your ex. then make your own financial arrangements for new mortgages. In the case of my daughter, she had two young children, so their welfare of a roof over their head was paramount. As far as the mortgage company is concerned, the property is still owned by him and my daughter, however, as part of the Financial Settlement of the divorce, it was agreed that he would make no further payments towards the mortgage (that is being handled by my family). If my daughter should fail to make payments (which she wont) and the mortgage company reposses the house, he is indemnified against any action the mortgage company might take to get their money back (the wording was agreed between my daughter and her ex. and the solicitors just verified the content and witnessed the document - I don't think it would cost a lot of money if you and your ex. wrote the document and got a solicitor to verify the content and witness it). If my daughters ex. wanted to get his own house, he would have to declare that his name is on this mortgage. However, as I said before, it's all about 'affordability' so we could provide him with a letter stating that he does not make any payments. You can have your name against as many mortgages as you like, providing you can demonstrate to the mortgage companies that you can afford the payments.

Pen..........to be absolutely honest, your situation is not the same as my daughter's, so I don't think I could make any useful comments, sorry.

Although I hope might comments might help, please seek professional advice before committing to anything (solicitors, Citizens Advice , Government agencies etc.).


Pen......
Alan Selwood
Posted: 21 April 2014 17:57:41(UTC)
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The first place to go with queries of this nature is the Citizens' Advice Bureau if you can't afford a solicitor. Then at least you get a small amount of free advice from someone who should be sufficiently qualified to give that advice, and will probably be a solicitor spending half a day in week doing this 'pro bono' type of work.
LouisV-W4
Posted: 22 April 2014 11:52:10(UTC)
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LenL and pen,

As with SJB, I'm not an expert, but for me, the first consideration must be whether either of you are still paying towards your ex-'s mortgage.

Next, have either of you informed your mortgage provider that you are no longer living at the property, and no longer paying the mortgage?

Next, are you receiving correspondence from the bank at your current address?

Yes, the banks are now looking at affordability, and here's the crux. The banks are looking to offload any customers they believe may be 'risky', and if your income is no longer being used, their affordability criteria is unlikely to be met and they may decide your ex-'s cannot afford it on their own. They may be entitled to cancel your mortgage or demand a re-mortgage on different terms if they believe you have broken the terms of your mortgage.

Re-mortgaging would not necessarily affect you, but would have a serious impact on your ex-'s.

Definitely seek advice from the CAB, but if it was me, I would force the issue into the open. Write to the bank to advise them that you are no longer living at the property and no longer paying towards the mortgage. Then see what happens.

Of course, this could all get very messy if the bank forces your ex-'s into having to sell the property if they can't re-mortgage. But is that your problem?

Tough? Yes. But this is about your financial future, so you really cannot afford sentiment.
vanda henry
Posted: 23 June 2014 10:36:31(UTC)
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Joined: 23/06/2014(UTC)
Posts: 1

hi all i wonder if you could put some light on a subject for me, my freind seperated from his wife 9 months ago, he has since paid all of the mortgage from his account. He has now got a job in a different area and needs to rent obviously he cant afford to do both. his mortgage is with his bank he is worried about bad credit and debt untill his divorce goes through, while he is waiting for an appointment with a solicitor i wonder if there is anything he should be doing or what the outcome might be

regards v henry
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