Mortgage for part owner?

[harv99]

I own my house worth about 200K and have a 100K mortgage outstanding. My partner has moved in and we have agreed that she will pay 50K and acquire a quarter share of the house. We will have the house as tenants in common.
My problem relates to the 50K I will have left to pay. My partner does not have a good credit history so if we applied for a joint mortgage it is likely to get turned down. Ideally I would like a morgage in my name only, but will lenders give me one? I will be 75% owner of the property wanting a 50K mortgage that represents about 25% of the value of the property.

[EverClean]

Firstly you will be tenants in common with disproportionate shares. If you die the 75% goes to your next of kin and if she dies the 25% goes to her next of kin. Unless you have a valid will that states that the share reverts to each other then her parents or siblings can inherit a quarter of your house.

The mortgage can only be granted in the names of the owners of the property. So the mortgage would have to be for the whole property in joint names and taking both credit histories into account.

This is less of a problem now as there are still very good mortgage deals for people witth credit problems. There is a deal out there for 5.02% discount for discharged bankrupts.

The best advice is to get a credit report done on each of you and take them to a mortgage adviser and get the best professional advice.

[harv99]

Thanks for that. Yes I am aware as tenants in common we can leave our respective shares to who we wish in our wills. Thats why we are doing it, so her children can inherit her quarter share and mine my three quarter share. If we were joint owners and say I died first then she would get the house and when she died her children would get the lot and mine nothing. We want to avoid this so settled for tenants in common.
We are settling her debts and have agreed 75% of the balance as full settlement for the two debt recovery companies that we are dealing with. Hopefully this will help her credit score although I am aware the records stay for years. I'm a bit worried that if we apply for a mortgage and get turned down then this will affect my credit record adversely particularly if experian etc link us together.

[EverClean]

A joint application will create a "financial relationship" between you. Some companies will view the financial relationships you have with others when making their decision on whether to lend. So if you had an application with your partner now it could impact on single applications you make in the future.

If you go to a half-decent mortgage broker then they can find you someone who won't turn you down. However your credit record will not show if you are accepted or rejected - just the fact that you have had a credit search done on you by a financial institution.

[Mrs_Pegasus]

Has this changed recently? 5 years ago I obtained a mortgage in my name only but my then partner was named on the deeds. He had put down a considerable lump sum on the property and I was simply mortgaging for my share.

[harv99]

I think it must be different now. I saw a mortgage broker a couple of days ago and she confirmed that if my partner is on the deeds, the mortgage must be in joint names. She rang a solicitor contact who suggested my partner stays off the deeds so I could get a mortgage in my name only but we set up a thing called a declaration of trust whereby it could be written down that my partner is entitled to a quarter share. The solicitor also recommended we write wills to the same effect but pointed out the wills can be changed at any time. Anyone heard of a declaration of trust and whether this could achieve what we are trying to do?

[EverClean]

I don't know when it changed but this is certainly the case now.

Declarations of trust are used for various purposes now - a popular one being with regards the proceeds of a life assurance policy. The solicitor is the right person to advise on this. If they give you the wrong advice then you have all the rights in the World to chase them for recompense. These rights do not apply to advice given on AnswerBank.