UK Remortgage to remove ex-partner problems question!
September 21, 2015 2:15 AM Subscribe
I currently have a mortgage and for the last two years since I split with my partner have paid it on my own perfectly well. It is time for us to remove my ex from the mortgage but cant seem to due to a bit of negative equity. Can anyone suggest what to do next?
Two years ago my partner cheated on me and we split up. She walked away and now rents her own place and I am paying the mortgage whilst living in the house we bought together. She is still on the mortgage but hasnt paid anything to it since we split.
We would both like to remove her from the mortgage and have been told remortgaging is the way to do this. I phoned my bank to do it and they said the house is in negative equity so I cant. (the house was worth £85,000 when we bought it. Now we currently owe £72,000. I have since had the place replastered and have double glazing, new low maintenance front garden etc and generally it looks a lot better as it was run down when we got it. However the area is still relatively poor)
Any ideas where I can go from here?
Two years ago my partner cheated on me and we split up. She walked away and now rents her own place and I am paying the mortgage whilst living in the house we bought together. She is still on the mortgage but hasnt paid anything to it since we split.
We would both like to remove her from the mortgage and have been told remortgaging is the way to do this. I phoned my bank to do it and they said the house is in negative equity so I cant. (the house was worth £85,000 when we bought it. Now we currently owe £72,000. I have since had the place replastered and have double glazing, new low maintenance front garden etc and generally it looks a lot better as it was run down when we got it. However the area is still relatively poor)
Any ideas where I can go from here?
You have to think of it as if you didn't own this house yet, but wanted to buy it on your own. That's the way the mortgage company will view it.
Say the house is worth £65000, and the mortage company is willing to lend you £50000. So your options are
a) Find the missing money to reduce the loan to £50000. So you'd have to find £22000 in this example.
b) Find a different mortgage provider that will accept a higher valuation on the house, or who will lend you a higher proportion of the valuation. You might still have to find some money to put down, but maybe less. If there are properties like yours selling for much higher than your valuation in your area, you could be in luck.
c) Sell the house. Then you only have to find the difference between the mortgage amount and the valuation.
It's presumably in your ex's interest to get off this mortgage, and she's underwater here as much as you are, so she might be receptive to finding some of the money required to solve the problem.
Unfortunately the work you did on the property is neither here nor there. If nobody will pay more than £65000 for a house down your street (judged by the evidence of other people who sold houses on your street recently) then you can spend as much money as you like on the house and it won't necessarily be worth a penny more.
posted by emilyw at 2:45 AM on September 21, 2015 [3 favorites]
Say the house is worth £65000, and the mortage company is willing to lend you £50000. So your options are
a) Find the missing money to reduce the loan to £50000. So you'd have to find £22000 in this example.
b) Find a different mortgage provider that will accept a higher valuation on the house, or who will lend you a higher proportion of the valuation. You might still have to find some money to put down, but maybe less. If there are properties like yours selling for much higher than your valuation in your area, you could be in luck.
c) Sell the house. Then you only have to find the difference between the mortgage amount and the valuation.
It's presumably in your ex's interest to get off this mortgage, and she's underwater here as much as you are, so she might be receptive to finding some of the money required to solve the problem.
Unfortunately the work you did on the property is neither here nor there. If nobody will pay more than £65000 for a house down your street (judged by the evidence of other people who sold houses on your street recently) then you can spend as much money as you like on the house and it won't necessarily be worth a penny more.
posted by emilyw at 2:45 AM on September 21, 2015 [3 favorites]
Can I just check, is the bank basing the assessment of value on general conditions or have they done a specific survey of the property? Might be worth £200 to get a proper survey done if it is the former.
posted by biffa at 3:39 AM on September 21, 2015
posted by biffa at 3:39 AM on September 21, 2015
I don't see how you have to remortgage, don't get fobbed off by some call centre operator. If you want to assume all responsibility for the mortgage and she wishes (in writing) to relinquish all interest in the property then that is simply a matter of amending the contract.
IANAL but this situation seems analogous to one where a contract initially involving 2 parties is amended due to the death or incapacity of one of the parties. I'll bet a letter from a solicitor will work wonders.
Start with the Citizen's Advice Bureau, they usually have a solicitor come to offer general advice.
posted by epo at 6:27 AM on September 21, 2015
IANAL but this situation seems analogous to one where a contract initially involving 2 parties is amended due to the death or incapacity of one of the parties. I'll bet a letter from a solicitor will work wonders.
Start with the Citizen's Advice Bureau, they usually have a solicitor come to offer general advice.
posted by epo at 6:27 AM on September 21, 2015
that is simply a matter of amending the contract
You and your ex have a contract with the mortgage company and you can't magically alter that contract without the consent of all three parties. You also can't just relinquish interest in a property in writing! And as I understand it, neither of you can relinquish your interest in it at all right now without the consent of the third party here, namely the mortgage company.
Imagine the similar situation where I have very bad credit but I take out a loan and you (with your super great credit) act as guarantor. No loan company would look at us twice if we could just up and decide to remove you from the guarantorship without the loan company agreeing.
posted by emilyw at 7:10 AM on September 21, 2015 [1 favorite]
You and your ex have a contract with the mortgage company and you can't magically alter that contract without the consent of all three parties. You also can't just relinquish interest in a property in writing! And as I understand it, neither of you can relinquish your interest in it at all right now without the consent of the third party here, namely the mortgage company.
Imagine the similar situation where I have very bad credit but I take out a loan and you (with your super great credit) act as guarantor. No loan company would look at us twice if we could just up and decide to remove you from the guarantorship without the loan company agreeing.
posted by emilyw at 7:10 AM on September 21, 2015 [1 favorite]
IAAL with specific and extensive experience in this exact field and epo's advice is incorrect.
The CAB doesn't have solicitors available for advice on private property issues. They're stretched to the limit dealing with contentious matters with zero funding.
Your first step is to find out exactly what your lender's requirements would be to release one party from their covenants under the mortgage. If they're not prepared to do that, then you'll need to remortgage, but if you're in negative equity, this will be difficult.
See an IFA to discuss your options. You can find one here.
posted by essexjan at 7:18 AM on September 21, 2015 [5 favorites]
The CAB doesn't have solicitors available for advice on private property issues. They're stretched to the limit dealing with contentious matters with zero funding.
Your first step is to find out exactly what your lender's requirements would be to release one party from their covenants under the mortgage. If they're not prepared to do that, then you'll need to remortgage, but if you're in negative equity, this will be difficult.
See an IFA to discuss your options. You can find one here.
posted by essexjan at 7:18 AM on September 21, 2015 [5 favorites]
This is the perfect time to get your ex off the mortgage as its in negative equity. If it goes positive you'll have to buy them out. Start with the existing lender and go from there per essexjan's advice
posted by zia at 8:17 AM on September 21, 2015 [1 favorite]
posted by zia at 8:17 AM on September 21, 2015 [1 favorite]
Yes, clearly the lender has to consent and I don't think I implied otherwise. I still can't see why this would require remortgaging. I defer to essexjan but "find out exactly what your lender's requirements would be to release one party from their covenants under the mortgage" sounds like "not getting fobbed off by a call centre operator" to me
posted by epo at 11:47 AM on September 21, 2015
posted by epo at 11:47 AM on September 21, 2015
Just to add, the CAB might not be able provide much more info than this:
Buying your partner out
If you buy your partner's share of the home you become the sole legal owner.
You'd need to get the property valued and agree a figure. If you have a joint mortgage, the names can only be changed if your lender agrees. The lender can refuse if they think that you can't afford the repayments. If this happens, you may have to get a mortgage from another lender.
You'd also need to get a solicitor to change the legal ownership from joint names to one name.
posted by wilko at 12:03 PM on September 21, 2015
Buying your partner out
If you buy your partner's share of the home you become the sole legal owner.
You'd need to get the property valued and agree a figure. If you have a joint mortgage, the names can only be changed if your lender agrees. The lender can refuse if they think that you can't afford the repayments. If this happens, you may have to get a mortgage from another lender.
You'd also need to get a solicitor to change the legal ownership from joint names to one name.
posted by wilko at 12:03 PM on September 21, 2015
I don't see how you have to remortgage, don't get fobbed off by some call centre operator. If you want to assume all responsibility for the mortgage and she wishes (in writing) to relinquish all interest in the property then that is simply a matter of amending the contract.
The contract is between both of them and the bank. The bank sees a mortgage in negative equity, which therefore carries much more risk for them in the event that something goes wrong & the mortgage goes unpaid, because the sale of the house wont cover the remaining mortgage balance.
Currently, the bank can go after two different people for the difference between what they recover from the sale of the house & the outstanding debt if the mortgage goes into default. In this situation, the bank is not going to let one of those two people walk away from that obligation, as it materially increases their risk of loss with no compensation for them.
This is why the easiest solution is a remortgage, but with a different bank. Don’t go to your existing bank, because they have absolutely no incentive to help you. The moneysavingexpert.com remortgage guide might be useful reading.
posted by pharm at 1:16 AM on September 22, 2015
The contract is between both of them and the bank. The bank sees a mortgage in negative equity, which therefore carries much more risk for them in the event that something goes wrong & the mortgage goes unpaid, because the sale of the house wont cover the remaining mortgage balance.
Currently, the bank can go after two different people for the difference between what they recover from the sale of the house & the outstanding debt if the mortgage goes into default. In this situation, the bank is not going to let one of those two people walk away from that obligation, as it materially increases their risk of loss with no compensation for them.
This is why the easiest solution is a remortgage, but with a different bank. Don’t go to your existing bank, because they have absolutely no incentive to help you. The moneysavingexpert.com remortgage guide might be useful reading.
posted by pharm at 1:16 AM on September 22, 2015
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You should consult a few!
At the very least, maybe you can write a legal contract with your ex regarding how you both interact with the mutual mortgage contract and obligations until this issue is resolved. My thought is, a lawyer can help get your ex off of the mortgage, tho. There must be a way to do what you want.
Lawyer.
posted by jbenben at 2:44 AM on September 21, 2015