Flat ownership

[kwicky]

My grand-daughter took out a mortgage with a partner (not married). The mortgage with excess totalled 110%. They split up and she left. He remained. She continues to pay the mortgage as he is unemployed. The bank refuses to let her have sole ownership because of her income. To sell up will leave a huge negative balance. She would like to keep the flat but in her sole name. What is the solution?

[STAH]

Hi.

What is this excess of 110%? Does this mean that the mortgage balance is 110% of the property value? (ie Property value = �100,000. Mortgage balance / money owed to mortgager (the bank) = �110,000)

If this is the case, how has this come about? I knew that the property market has become less buoyant, but I was unaware of any part in the the UK where negative equity has come back into play. Surely, the bank would not have lent her the money in excess of the property value?!

Please could you clarify on this point, and I will try and suggest some answers to your question.

Regards,

Scott

[themas]

Presumably the partner was not unemployed when they took the mortgage out. If he was then - as the mortgage lender is now saying her income alone is not high enough - I would question why the lender agreed to give them the mortgage as the partner would have had no income apart from benefits. If this was the case, then it could be that whoever sold them the mortgage mis-sold it and, as mortgages are now regulated by the Financial Ombudsman Service, it might be worth talking to them to see if a complaint could be made.

In principle, she could try and re-mortgage in her sole name but - if the mortgage really is 110% of value - she will not be able to do so up to the amount needed to clear the present mortgage. This seems only to leave her with the option of finding someone else to become joint owner with her but, even if she can do this, would they get another mortgage that is more than the property value?

Anything she wants to do also depends on the ex-partner being willing to give up his legal interest in the property. Would he do this without being bought out?

[kwicky]

Thank you for the comments!
When the joint mortgage was taken out both were working.
The situation appears worse than I previously mentioned. Her partner was on drugs and had outstanding debts and together with furnishing the flat pushed it to the 110%. They took out the maximum mortgage allowed under the rules but also took out a loan for the remainder. As these were in joint names both are liable for the repayment.
I believe he would be willing to vacate the flat but that leaves the deed ownership in joint names. Could he come back at a later date and claim his 50%? At present they own nothing so to buy him out would add even more to this saddled debt. But as stated the building society would not allow her to have sole ownership and they are working to the rules when the mortgage was first taken out.

[themas]

I believe that sometimes when this sort of arrangement is made the loan is not secured on the property and I can't see how the lender could purport to secure a loan on the property if they knew they were lending more than its value. Is the loan secured in this case? If it is not, then what % of value is the secured debt (i.e. the mortgage)? Would she be able to remortgage with another lender for the mortgage amount (excluding the unsecured loan)? There would still be a liability to pay the unsecured loan instalments but - from your post - it seems she thinks she could manage this as well as the mortgage.

If the loan (as well as the mortgage) is secured, then the situation is more difficult. Even if she wanted to sell, the lender might prevent it as the debt would not be fully covered - but maybe there could be a case for a mis-selling complaint if the lender knowingly secured more than the value of the property.

She should not make any changes without getting the ex's name off the title (as well as getting him out of the property). If he is left on the title he could come back later for his share - and she could not sell without his agreement. Unless he has actually put any money of his own into the flat (by way of deposit or mortgage payments etc.) it seems as if he should be bought out for a nominal sum - but whether he would see it that way is another matter.

[Memore]

i had same problem i didnt earn enough in the banks eyes to pay the mortgage and have flat in my name yet they still expected the money they were extremely unhelpful and I was left struggling with it for about 7 years i rented it out and didnt tell them as only way not to be repossessed after that time i went back to them and they stillwouldnt take my ex boyfriend off the mortgage even though he left and hadnt paid - i was advised by solicitor to give flat back which i did and they sold it at a massive loss well below market rate and then tried to get money from me after about 5 years of hearing nothing. i settled on 3 grand but it took 10 years from start to finish i would never buy with someone again if you not married there is no protection you are liable for each other