Brother and I have mortgage: Is it possible for one party to remove themselves?

M

murphyslaw

Guest
Hi
Myself and my brother own a property in dublin. I having been seeing somone for around 4 years now and are certainly at the stage now where we should be living together. My brother agreed that I could move out and he would be the sole name on the title deeds. However our mortgage provider will not agree to a sole mortgage for one of us as like so many properties it is in negative equity. There is approx 188k on the mortgage and my best guess judging from around the area would be that we would get no more than 160 in a sale. The bank dont seem to be agreeable to just one of us moving out and the other continuing on paying the mortgage by themselves. Even if I put what savings i have into the paying the difference i would no deposit for a new place. Suggestions PLEASEEEEEEEE!
 
I'm afraid it's bad news, the bank seldom allow one party to remove themselves from a mortgage unless the one left fully meets the now stringent criteria for borrowing that amount on their own. Add to that the problem of negative equity and you're going nowhere. From the bank's point of view they would prefer to have two incomes on the hook for the loan than one should either of you lose your job.
 
Thanks for the quick reply. Its not great news but it was good to get the confirmation. The only option is to move my partner in and ask my bro to move out, which he said he would be willing to do, meaning he mortgage is still being paid, just names have changed, but it may be another mortgage required?
 
Your partner is hardly going to be agreeable to taking on a negative equity mortgage, even if the bank allowed them to replace your brother on the mortgage. It seems best to work out an agreement between yourself and your brother, whereby the one who stays in the house undertakes to pay the mortgage on their own and to get the mortgage and the house transferred in their name when the bank allows it. And the one moving out agrees to transfer their share of the mortgage and of the house to their brother.

You'd need to consult a solicitor to get the suitable agreement drawn up.

However, this is only going to be valid between yourself and your brother. As far as the bank is concerned, it will be able to pursue both of you for the repayments.

And, if your brother moves out, it will be extremely hard or impossible for him to get another mortgage to buy another property.

Another possibility is if you move out and your partner buys a new property in their own name, without you. Or you may have to rent together until you and your brother clear the negative equity and build up a positive equity, so that the bank allows the transfer of the mortgage into your brother's name. That is, if your brother has a permanent job with a high enough salary for that.

Whichever way to look at it, it's not an easy situation to sort out.
 
Maybe not a viable option for you, but how about both you and your brother move out and let it become an investment property which could be rented out to cover costs and still own it together.
 
This will be messy unless both you and your brother deal with it now. Certainly don't get another party involved.

Option 1

Sell at a loss and yourself and the brother pay the extra 20K

Option 2

You take over the mortgage and get it transferred to you

Option 3

Your brother takes over, not an option as bank won't give him a mortgage outright

Option 4

You all move out and treat it as an investment property, messy because there are two parties, but you are brothers so doable, but you'd have to do the figures on this and it will hinder both of you should you wish to purchase a home. Problem is becomming a landlord is not for the faint hearted, all kinds of issues and who will manage it etc.

Option 5
Move girlfriend in and tranfer mortgage to both you and her. Certainly if I were her why would she want a negative equity property. Also you're not married and we've had many stories on here of couple no longer together trying to sort out the financials which were in general the worst messes of all.

Personally I'd go for option 1 and start to save again for a deposit.
 
Option 6 Brother moves out partner moves in and pays rent to brother who keeps the mortgage in his name.
 
thats not very fair on the partner. would it not be better all round if it was agreed that the partner would buy a property and you move in there and pay the mortgage with your partner and your brother goes on paying the mortgage for your house and in five years time you change over the names on both mortgages
 
Mommah said:
Option 6 Brother moves out partner moves in and pays rent to brother who keeps the mortgage in his name.
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I agree.

I honestly dont understand why this is considered a bad idea or unfair on the OPs partner.

Is owning a share of a propery in negative equity in the current Irish economic conditions such a prized position that it is unfair to deprive someone of it ?
 
oldnick said:
Option 6 makes best sense if done quietly.
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Might even work openly as the partner might qualify under the rent-a-room scheme????
I can't see how its unfair on the partner.
What would be unfair is to ask him/her to buy half the mortgage.
I think the government/banks need to cop on and be flexible in these situations rather than implementing the letter of the law on these unfortunately purchasers...eg forcing them to change the terms of the mortgage/house insurance/pay nppr/prtb because their is now a tenant of sorts.
 
@ stupid head, that is one option provided brother does not miss payments, which will effect the one who has moved out credit rating and bad debt record. Option 6 is a safer option in some respects based on the fact that the mortgage gets paid regardless, however the partner gets no benefit from having paid any money towards the house. I also have an option 7 which will be to use the car from back to the future to go back and stop the old me from agreeing to buy this house!
 
You know, I am inclined to think that if you can sell, even at a loss, and have enough savings to clear the negative equity, that's the best option (i.e. option 1), as it's least messy and will provide both you and your brother with a fresh start.

Yes, your savings will be gone, but not those of your partner, and you'll be able to rent together for a while, while saving for a deposit for a joint property. It will also give you time to check whether your relationship is going to last. The last thing you need is another messy situation, trying to sort out a property in negative equity, jointly owned by you and your partner, if you break up...
 
OP- dont understand your last post " partner gets no benefit from having paid any money towards house".
The "benefit" is getting accommodation, as well, no doubt your company. And paying rent is presently more beneficial for most people than paying a mortgage.
(Also see Bronte'spoint no.5 )

Obviously it has to be a fair rent which may or not be the same as your bro's mortgage payments.

OPTION 8 - You mention it's a house rather than an apt so it has a bit of room - why not live 3 together for a short period in these tough financial times and all save money?
 
Mommah said:
Option 6 Brother moves out partner moves in and pays rent to brother who keeps the mortgage in his name.
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That's a non runner because it's too messy. 10 years down the line we have another 'boom' and property is worth a lot and couple splits up and she claims she paid mortgage and not rent.

In addition the rent paid to the brother who moves out will be liable to tax, prtb and all that other lovely stuff.
 
Bronte said:
That's a non runner because it's too messy. 10 years down the line we have another 'boom' and property is worth a lot and couple splits up and she claims she paid mortgage and not rent.

In addition the rent paid to the brother who moves out will be liable to tax, prtb and all that other lovely stuff.
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I think the best option is for the brother to move out, the partner to move in and pay rent. There is no liability for tax, prtb etc if its done under the rent a room scheme.

I think its highly unlikely there is going to be another boom in 10 years time, and even if there is, if she has a rent book she cant claim she paid mortgage not rent.

I dont see how the partner gets a raw deal here, she pays rent, she has a roof over her head, she is not tied into a negative equity property.
 
Whether the partner gets a raw deal or not depends on her circumstances. If she is currently living rent free with her parents, say, and wants to buy a house in her name (possibly jointly with OP), that she expects to appreciate in value over the years, with her money going on repaying the capital and not only the interest. In this situation she does get a raw deal if she is being forced to pay rent and can't therefore afford to buy a house herself.

On the other side, if she can't buy a house on her own and is currently paying rent anyway, then paying rent to her partner's brother for a while, while living with her partner doesn't look like a raw deal.

But ultimately I agree with Bronte in that this is a messy situation and is not acceptable long-term. It should only be considered short-term, maybe for a year or two, while all three of them - OP, brother and partner - work hard to eliminate negative equity and build up some positive equity, so that the bank would then allow OP to buy the house from his brother or vice versa.

Of course, this relies on house prices not dropping much further, as this would worsen the negative equity situation. So overall the better option is to sell the house, clear negative equity with savings and start saving again for another house.
 
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