Mortgage Advice after Seperation

[121o121]

Hi All

I'm just seeking some general advice on behalf of my sister.

They have a joint mortgage which they currently pay by cheque each month. It's all up-to-date with no arrears. Unfortunatley they have seperated and she has moved out of the marital home.

He has been out of work for some time now. She's still paying all the bills at the home (although she isn't living there) for him because he's out of work. Now she has left and trying to rent her own place she has told him she can't carry on doing this and is going to stop paying them.

I've told her to speak to all the utility companies and explaining the situation and to give final meter readings etc. Also informing the council regarding the council tax.

The main thing I'm uncertain about is the mortgage. She'll have to fight hard to get him to sell the house, and considering theres no real money in it (and the possibility of not being able to find a buyer) she's happy just to walk away from it.

However. I'm not sure how easy it is to disassociate yourself from a property you have a joint mortgage on? Is it a case of signing deeds over? I can't see him being able to keep the house on and I personally think it will be repossessed. Obviously, she doesn't want to connected with it if that happens.

Can anyone offer help as to the best way to deal wih this?

Thank you.

[Billyhunt]

Hi 121o121,

It is never straightforward when a relationship breaksdown and as you are probably aware it is difficult to settle issues such as this. It really is down to negotiation.

A court though can adjust legal ownership or beneficial interest in a property, and make orders about who meets any mortgage payments, but it cannot transfer liability for a mortgage. If the ownership of a property bought through a joint mortgage is transferred to one partner, both partners will remain jointly and severally liable for the mortgage unless the mortgage lender agrees to change the liability. So even if the mortgage was changed by the court only the lender can agree liability.

I would advise her to discuss the situation with her lender if she is sure the relationship is over. She may be able to sign the property over to her partner but needs to ensure the lender also signs over liability or else they may come after her if there is a shortfall. Failing this, could she take the house on herself and maybe pay the mortgage on her own. A sweetner may be if she tells her ex that if he moves out and lets her move in then she will have a contract drawn up that gives him a beneficial interest up to the date he moved out for example, get a valuation now, then split any equity value and either pay him off or pay him this fixed sum when she leaves. As you can see it relies heavily on negotiation.

Get her to speak to her lender and her ex. Good luck

Billy

[b4nkers]

A good starting point would be for both parties to the mortgage to go in and see a representative from the mortgage company to discuss the situation at their earliest opportunity. (Even if this means attending separate appointments if the relationship is beyond civil). The lender will be able to say whether or not the either party is able to take on the mortgage debt on their own accord, this will be based on their current income/outgoings. I would recommend that both parties seek independent legal advice to clarify the legal issues.

In the short term also if not already done, switching the mortgage payments to interest only will reduce the monthly mortgage cost though this is only a short term fix until things are sorted out. Whilst on interest only nothing is being repaid off the amount which is outstanding.

Allowing the house to be repossessed or handing the keys back to the lender is known as a voluntary repossession. It may seem like an easy way out but a repossession will remain on both parties credit file for 10 years, making the ability to get any credit in the future more difficult and at a premium.

[slick132]

Also, if the house IS repossessed, it is likely to result in a shortfall unless there is good positive equity in the property.

The Mgge Co will persue either or both parties to recover any shortfall and, as YS is the only one working, they are likely to chase her possibly getting a CCJ if the debt remains unpaid.

YS would be better to try and work out a solution where she remains in control of events - easy to say, I know !