A reader from Walsall's partner is looking to take his ex off the mortgage.
But she is worried about the costs.
Drawing on years of experience, mortgage adviser Katie Tucker - of mortgage broker Mortgageforce - tackles the problem.
Stephanie from Walsall asks:
My partner recently separated before meeting me.
His ex partner's name is still on the mortgage and deeds to the house, he says it will take time to get it changed and will cost too much money.
But is it really going cost that much? They only lived together in the house less than three months?
Unfortunately yes, there are both legal costs in re-naming the property deeds, and mortgage costs in re-naming the mortgage deeds. It makes no difference how long they lived together.
To take a person off a mortgage, you need to prove that the remaining person can afford the debt on their own (in this case your boyfriend if he is keeping the house) so he will need to speak to the mortgage lender and effectively apply for the mortgage on his own - and his income will need to be sufficient for the whole debt: the lender should lend him around four times income, if his income does not cover it, they won't allow it.
He should expect to pay administration fees of around £100 for the change, although the lender may insist on a whole new mortgage deal, in which case the fee could be in the region of £1,500.
I recommend he gets a quote from the lender. He may have to find someone else to join him on the mortgage, or he and his ex-partner may have to sell the house to repay the mortgage.
This would mean that they are liable to pay the Early Repayment Charge, which may be a whopping three or four per cent of the mortgage amount.
To take a person off property deeds, (known as a 'transfer of equity') one effectively needs to sell their part to the remaining person.
A solicitor may charge £200 - £500 for this.
However you may have further problems here because in this market, it's more likely that their property has lost value than gained it. This means that your boyfriend and his ex-partner may be losing whatever they saved as their deposit, which they will be reluctant to do.
This is all assuming that the former partner consents to being removed from the mortgage and property. Ultimately, their property may not be worth enough, and one may decide have to rent it to the other, or they both might rent it out to someone else, until the property has returned to its original value, and they feel comfortable enough to sell it.
The two most important things to remember when two co-habitants separate is:
- 1. Keep paying the mortgage, even if you think you are only liable for half- each person is actually liable for the whole payment each month. If you miss a payment, it will wreak BOTH credit scores.
- 2. Keep a formal note of all monies paid to each other, on the mortgage or as rent, as this will need to be taken into account in the future when calculating who owes whom what.
I hope this helps,
If you have a question for Katie, go to the myfinances.co.uk Ask the Mortgage Expert section.
For more information on the issues discussed here, go to www.mortgageforce.co.uk
Mortgage Force Ltd is authorised and regulated by the Financial Services Authority, and is entered on the FSA register (www.fsa.gov.uk/register) under reference 301046.