For varied reasons, you take a joint mortgage, and for other various reasons, you decide to quit from the obligation and transfer to one person. However, the process is always unclear and sounds complicated until you are ignorant about how things happen.
Many aspects appear in the bigger picture while transferring a joint mortgage to one person. You cannot relate everything to only condition. Some purposes and causes make people do this.
The Usual Reasons That People Do the Transfer Are –
Some common causes make the borrowers go for the big change. Such as –
- Selling the home and both the partners are moving out
- The owners want to keep the house and rent it out
- Want to hold one owner due to divorce and thus buying one out
Mortgage transfer is also known as transfer of equity
In case the partners are husband and wife and have children, their usual reasons are –
- One of the partners will live in the house and wait until the child reaches a certain age.
- One partner will keep a share in the property and will get his/her share when the property is sold.
Number of Options To Quit From a Joint Mortgage
The process of shifting the complete mortgage obligation to the other partner can be complicated in case of no clarity. In such a case, if you want a smooth move, the following are options to work on with your partner.
- Your joint mortgagor can buy you out
- You can sell the house and pay your part of the mortgage
- Convince the partner to bear the joint mortgage
- In case the other partner agrees, you can sell your part to a third party
- Ask the lender to ease the process with a due solution
What Lenders Consider When They Transfer Your Mortgage
Complete process of transfer runs on the calculation of AFFORDABILITY. All the factors at the time of mortgage transfer are more or less the same to any mortgage. After all, the ultimate conditions are about the repayment capacity of a borrower.
- Affordability – The person who will bear the mortgage after the other one leaves should have the strong repaying capacity.
- Credit/payment history – As you know, spotless credit history always gets easy approvals for financial products.
- Employment status – It includes current employment situations and past employment stability. Regular earning and the permanent job is more promising. However, there is no doubt that a self-employed with three or more years of experience can also get things done.
- Early repayment charges – The partner who is leaving the mortgage needs to make the payments of repayment charges. There is no compromise on that part.
- Stamp duty – The amount of stamp duty depends on the type of transfer. Are you transferring to a family member? Are you removing an ex-partner after divorce? Whatever is the condition, the stamp duty changes apply according to the requirements.
- Equity on the property – Certainly, the equity developed on the property needs to be handled properly. The mortgage amount is deducted from the property value. Your partner (leaving the mortgage) will take its share, or if you are leaving, your stake should be satisfactory.
Did you know? You can also transfer a joint mortgage to one person through a remortgage. The procedure remains similar to any other remortgage deal. The only difference is that in case of transfer, the issue of equity distribution between the two is essential, and that affects the whole condition.
What if You Want To Transfer The Mortgage To a Person in a Poor Credit Situation?
It is a complicated question because, in case of mortgage transfer, a huge responsibility shifts to just one person. In that case, the one who bears the obligation should have a strong repayment capacity. However, if that person has a poor credit rating, oops! It sounds like a problematic condition.
The recency of the issue is a significant factor and acts decisively. You can transfer the mortgage to a poor credit person if the missed payments happen in history. Also, the continuity of the default in payments is a significant factor. Even if it all happened but with a high frequency, the lender might get into doubt.
If the borrower has ample reasons to explain and justify that he can manage the monthly instalments of mortgage, the circumstances provide ease.
There is so much to do in the name of a mortgage transfer. However, you should not forget that the evident key player is the affordability only. Joint mortgages are always possible to shift to one person if you have made correct calculations on the part of repaying capacity.
The borrower who will remain behind after the other one moves on should be reliable in the eyes of the lender. That’s all and the rest of the procedure of equity, stamp duty, monthly instalments remain more or less the same.