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When buying a home with a friend, partner, or family member, you’ll likely want to increase your buying power and secure the money you need by getting a joint mortgage. Some lenders even offer joint mortgages for groups of more than two, if you’re looking to buy property with friends.
No matter how solid your relationship was when you entered into the agreement, life can get in the way — and for any number of reasons, you may find yourself parting ways with your home’s co-owner(s). When this happens, you may find it makes the most sense to remove that person from the joint mortgage, or transfer it to your name completely. Until that person’s name is removed, they still legally have a stake in the property. So you want to make sure you’re going through the process the right way.
In this guide, we’ll take you through how joint mortgages work — and the process of removing a name from a joint mortgage in the UK.
Spoiler alert; it’s not as complicated as you might think!
Put simply, joint mortgages are a loan taken out by two or more borrowers rather than a single person. Getting a joint mortgage will increase your buying power, which usually means you can afford a more expensive home — or you have more mortgage products available to you.
Getting a joint mortgage doesn’t require both parties to put an equal amount of money towards the deposit. It also doesn’t mean both parties have to contribute the same amount towards the mortgage. Joint mortgages mean all parties are legally responsible for the mortgage repayments, whether that’s an equal split or one person paying more. It also means you’re both joint owners of the property.
Typically, joint mortgages are taken out by couples. But you can also enter a joint mortgage with a friend, relative, or business partner — as well as a group.
Because joint mortgages legally bind you to a property, entering into a joint mortgage is a big financial commitment and should be thought through very carefully. Any issues with the other person’s finances, like bad credit history or arrears, could affect your buying power with lenders.
Also, if one person stops paying the mortgage, it’s up to the other person to fit the bill — or you run the risk of losing the property altogether. Which brings us to the next section…
Joint mortgages are a huge commitment, but sometimes, things just don’t work out. Maybe you break up with your partner, or circumstances mean your friend or relative needs to move out. In many cases, both individuals might decide to keep their names on the mortgage and get a lodger in, or rent the property out as a whole. But when one person leaves and the other stays, it makes more to remove their names from the mortgage completely — especially if the person who left is no longer prepared to contribute towards the monthly repayments.
Luckily, removing a name from a joint mortgage isn’t as complicated as you might think — although it does require some additional cash. You can buy the other person out and transfer the mortgage into one name, as long as you have the funds to both buy the other person out and cover the monthly repayments on your own going forward. If not, you might want to consider selling the property and splitting the profit, or keeping the joint mortgage and renting it out to cover the cost.
The key thing you need is permission from the person whose name you’re removing, or a mutual agreement on how to proceed. As long as the both parties are onboard with removing the name from the mortgage, the legal process is fairly straightforward — and can sometimes take less than a day.
All you need to do is let the mortgage advisor and your solicitor know you’d like to transfer the equity into your name, and organise the necessary documents for both parties to complete. Usually, you can use the same mortgage conveyancer you used to secure the mortgage in the first place, and they’ll project manage the process on your behalf. The process itself will cost you, but usually no more than a few hundred pounds.
If the person whose name you want to remove doesn’t want their name off the mortgage, and you can’t come to a mutual agreement or compromise, you might be in for a costly legal battle — especially if that person also refuses to contribute to the mortgage.
If you got a combined mortgage with someone who dies, don’t panic — you won’t have to shell out their half until the mortgage term is up. As long as you took out life insurance alongside your mortgage (which most lenders insist on), they’ll pay off that person’s loan.
Opting out of a joint mortgage can be stressful, but it doesn’t have to be. The length and complexity of the process largely depends on your relationship with the person whose name you want to remove — and whether the decision to do so is amicable and mutual. As long as all parties are responsive and cooperative, you can keep the process short and legal fees low.
Although it’s a great option to have, removing a name from a joint mortgage isn’t always the best option — especially following a breakup or divorce. Many homeowners decide to sell their house after a divorce as it’s more straightforward, and doesn’t require ongoing communication or shared responsibility for a property. Of course, this also depends on a few factors; like the value of the property and whether you’ll get the most bang for your buck.
Luckily, most mortgage brokers deal with a transfer of equity on a daily basis. So before you start scrambling for cash house buyers (which is understandable if you want to sever ties with this person), make sure to speak to your mortgage advisor and get your house valued first.
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