How To Add or Remove Someone From A Mortgage

How to remove someone from a mortgage

There are two elements to this: the mortgage and the legal work, which we explore below.

The legal process

The legal process is pretty straightforward, as all parties agree on what’s to happen. As with any mortgage application, the solicitors (conveyancers) will be involved in setting up the legal charge with the lender and those named parties on the ownership set up on the Land Registry, etc.

What you have to do

Not much. As part of the application, you would let the mortgage advisor and solicitor know it’s a transfer of equity. The solicitors will send out the necessary title transfer documents with their regular remortgage pack for you to complete. There is usually an extra charge for this – typically in the region of £250-£300 – but you don’t usually need a different solicitor to the mortgage conveyancer (unless you want one), as they can do it all for you.

If all parties agree

If you have your documents ready, it can take as little as a day to get a decision in principle and submit a full application.

If the person you want off the mortgage doesn’t agree

Then, your options are a legal challenge, which can be costly for all, so it is best avoided! Often, this results in the property being sold, but at some point, one or both of you need to compromise.

The mortgage process

The mortgage can also be surprisingly simple to sort. First, you would review your current mortgage and determine whether looking at other lenders is sensible or staying with your current deal. If you are not tied into a current deal, or if the repayment penalties make it worthwhile, you should consider switching to another lender regardless – it could be far cheaper if you get a better rate elsewhere.

The process is much like a remortgage for a better deal and involves a new application (even if you’re keeping the same mortgage), as the lender needs to assess that whoever remains on the mortgage is creditworthy and can afford it on their own. The lender will need to know your current situation, current income, and current credit history to ensure they’re lending responsibly.

They will review your credit records and usually ask for bank statements and payslips / self-employed proof of income (tax calculations, accounts, etc.). They may even send someone out to revalue the property (new lenders are more likely to do this).

Applying with a different lender is no different than staying where you are, other than it can take slightly longer if they need to value the property.

If you’re approved

Then, the solicitors will send you the paperwork. When all the docs are in and signed by you and the other parties being removed, they’ll let the lender know to complete. If all goes as planned, it can potentially go through in a month.

If you are declined

By your current lender (usually, this is due to credit score or affordability, i.e. your income is not deemed acceptable or enough to pay the mortgage on your own), then don’t panic; there may be other lenders who are happy to offer you the mortgage – remember all lenders are different and some are much more generous than others (lending up to and over 5x income or higher in certain circumstances).

You’ll have the best chance of getting advice from a mortgage expert who knows the market and specialist areas to help (enquire, and we’ll get you to one!).

Whether it’s divorce, death, or a change in personal circumstances, you’ll need to complete a transfer deed to remove a name from a joint mortgage.

Of course, it is possible to remove a name from the mortgage and add a new wife, husband, or partner to the mortgage as part of the same Transfer of Equity if someone else is joining the mortgage.

Removing somebody without buying out

The main thing to remember is that you can remove someone from your mortgage without buying them out (so long as they agree!), and the lender approves it. It depends on the ownership setup—most property is owned jointly as “joint tenants” in industry jargon, meaning you both own it all, so essentially, any equity in the property would be shared equally (or however you agree if this is different).

Some are set up as “tenants in common”, where you would have already agreed who owns what percentage of any equity (you’d probably know if you’d done this, but it’s worth checking with the solicitor who set it up). Either way, if you have agreed to it, it can be done relatively easily.

To remove a name from a mortgage, you’ll need to apply for a “transfer of equity” to remove the name from the title deeds while allowing the mortgage lender to remove them. Your mortgage lender will want to see that you can afford the mortgage on a single income instead of the previous two.

Note: If you decide to sell the property, one of you could still port the mortgage to a new property, which would keep the same deal with the same lender and avoid any repayment penalties.

How to get your name taken off a joint mortgage

There are several ways of getting out of a joint mortgage:

• Ask your partner to buy you out
• Sell the property and split the proceeds (if any)
• Ask your partner if they would agree to take over the joint mortgage
• If your partner agrees, you can sell your share to a third party
• Contact your lender and ask if they will remove you from the mortgage (your partner would need to demonstrate that they could service the loan)

As you can see from the list above, there are many reasons why you might want to cancel a mortgage, often due to a separation, investor partners going it alone, or someone wanting to be removed as a guarantor.

What you need to do

The process starts with the agreement of whoever you leave on the mortgage and ultimately requires that person(s) to apply to the lender in their own name. Rather than requesting removal, the remaining person requests to stay alone without you.

Note: If they agree, you can enquire on somebody else’s behalf; make sure you add them to the enquiry, as the expert will need to speak to them directly. If you’re also looking to get another mortgage as part of this transaction, we can help with that, too!

New mortgage arrangement

They can either approach their current lender or find a new one. The latter is always recommended, as it allows them to compare the best deals against their current one, factoring in any repayment penalties.

The lenders will assess the remaining applicant(s) based on their sole credit score/history, income and affordability. This is true of the current lender and any new lenders, as it is treated as a completely new application. They will also want to ensure the property has enough equity, as things can be trickier in negative equity since the lender loses some security in removing a party.

If they are approved, it’s up to the solicitors to sort the paperwork. If declined, they’ll need to find out why (it’s usually credit score or affordability) and approach another lender who specialises in that field. Such circumstances are why speaking to a mortgage broker during this process is highly recommended. 

Legal requirements

This should all be relatively straightforward. Whoever you’re leaving on the mortgage needs to let the solicitor know you are being removed, and they can send out additional paperwork to cover the “transfer of equity”. You’ll get something to sign as part of this to confirm you’re happy the solicitors can then let the lender know to complete the application.

Solicitors will also take any money due to you from the lender (if they are raising money) or from them and pay it to you if you are being bought out.

Other considerations

There might be Capital Gains Tax implications. If the property isn’t your primary residence, you might need to pay capital gains if it has increased in value. Check with the solicitor or an accountant.

Property investors who have signed a personal guarantee may want to confirm with the lender they are departing from their obligations, which are voided after the transaction. You might be surprised to know that this is not always the case. Some personal guarantees survive the removal of interest from the property and mortgage, so you could leave yourself with liability and none of the security!

How to remove an ex from a mortgage without refinancing

You don’t need to remortgage to remove an ex from the mortgage, as it is possible to do a Transfer of Equity on your existing product. Many lenders also allow capital raising on an equity transfer.

As part of the process of transferring a mortgage into a sole name, a lender will carry out affordability and credit checks, and there will be administration and legal fees to pay. For this reason, many people use buying out a mortgage from a partner as an opportunity to review their mortgage and often choose to refinance, mainly if there are early repayment charges (ERCs) payable on their current deal.

Although you can build any ERCs into a settlement between the two of you, it should be affordable. A broker will be able to advise you on this if this is an option you want to consider.

What to do if you’re in a joint mortgage and the other party isn’t paying their way

If you’ve been left in the lurch paying a joint mortgage, or you’re worried you’ll be left to pay it on your own, you’re not alone. This is a really common scenario and something the mortgage experts we work with handle every day, so don’t panic!

Most importantly, it’s usually recommended that you do everything you can to ensure the mortgage is being paid.

Whether you’ve “paid your half” or not is irrelevant in the eyes of the lender and the credit agreement you have signed into. Each person on a joint mortgage is wholly responsible for the full payment. Any part or missed payments would appear on your credit files, regardless of where the blame lies.

Missed payments on a mortgage are one of the biggest issues for any new lender, and it will make your next application harder and, most likely, more expensive. Not impossible, of course, as there are lenders who can consider late or missed mortgage payments from the last 12 months, and one or two can even consider someone currently behind (with good reason). Enquire if this is you. We’ll introduce you to the right mortgage broker.

What you can do: Given the circumstances, you may want to appeal to the lender directly and ask them for an organised and temporary payment holiday or perhaps a switch to interest-only. This will buy you time to get things sorted and shouldn’t negatively impact your credit report (depending on the lender—please check this first!).

You then have three options…

• Sell and move
• Buy each other out
• Convince/help the other person to fulfil their mortgage obligations

If you want to buy them out, then you’ll need to be able to afford the mortgage on your own. Typical lending limits are around 5x your annual pre-tax salary (if you earn £50k, the maximum mortgage you could get would be £250k). Make sure you speak to an expert about this, as just going to your current lender limits your options, and if you’re declined, it can harm your overall chances of securing the outcome you want. 

• Read more about mortgage buyouts

If you can’t buy them out

If your lender has said they can’t help and you haven’t spoken with a mortgage broker, this is your next logical step. Don’t waste time searching for the right expert – our team handles complex cases like this every day. Get in touch with us and we’ll explore all your options. If no new lenders can be found who can help, the option is to keep paying the mortgage until you sell the property, or ultimately, you face repossession and a big scar on both of your credit files for years to come.

Mortgage buyouts

Buying someone out is much simpler than it might sound/feel (if you use the right advisor). The main considerations are getting the mortgage approved and the legal agreement.

The legal process

Your conveyancer (solicitor) would handle this, sending you and the person you’re buying some extra forms to sign when they sort the mortgage. It’s nothing to worry about at all, and it’s perfectly normal and straightforward when you see them!

The mortgage process

This can be a bit more complex. You’ll need evidence that…

1. You can afford the mortgage on your own based on your income
2. There is enough equity in the property to take that additional money
3. You have the appropriate credit score/history

Your mortgage advisor will answer all of these questions for you.

It’s possible to complete a buyout with the same lender you have now, but this limits your options and the rate you’ll pay. Even if you’re tied in with early repayment penalties, it’s best to have a look and compare all deals to get the best one and the best one you qualify for. Getting a better rate when you borrow more will help reduce the strain on your finances. So, it’s always worth the time to do this.

Note: Using your current lender often means taking funds on a new deal with different rates and end-product dates. This can be a bit awkward in the future if your current mortgage expires in, say, 12 months and the new bit in 2-3 years, as you’ll always have part of the mortgage tied in and some going onto the (often more expensive) standard rate.

What you need to do

Just let your mortgage advisor know you’re buying someone out, and they can handle the rest, including calculating precisely what you can borrow, getting this approved, and introducing you to the right solicitor. The solicitors then take care of the paperwork, and when it all goes through, they will release funds from the lender to whoever you buy out.

Note: If all parties agree and are ready to go, the process can take 4 to 8 weeks. If you are declined for whatever reason, many other lenders may consider you. Remember, you can add someone else to the mortgage to help with affordability or just because you are swapping owners.

If you’ve not yet agreed on the value and, thus, the price you’re paying, you can work on that while your advisor calculates what you can afford. Valuing the property can be challenging, but usually, you are not far off when looking at comparables online (sales of similar properties in the area). If you can’t agree, you can instruct an estate agent or a surveyor to come and value it for you.

Adding someone to a mortgage

It is possible to add your partner, husband, or wife to your mortgage, and it can be a sensible move, especially when children are involved. However, be aware that the person you want to add to your mortgage will be subject to the usual income and credit checks and may even have to pay stamp duty.

Generally speaking, you have two options if you need to add someone to your mortgage.

You could either: 

• Add them to your existing agreement through a Transfer of Equity
• Or refinance your mortgage and switch to a new joint agreement

Transfer of equity

To qualify for a Transfer of Equity, the new person joining the mortgage must undergo affordability and eligibility assessments with your lender. They will become a legal owner of a portion of the property, and your lender will need to know they’re creditworthy. The process will be similar to a remortgage.

Refinancing

The other option is to refinance with your current lender or search the market for a better deal from another provider. The main benefit of remortgaging is that you could find a new mortgage with a more favourable interest rate, but you will need to consider whether your current deal has an early repayment fee.

The key is to work out the overall cost and how much you could save in the long run. There’s little point in refinancing onto a product with a slightly lower interest rate if you have to pay through the nose in fees and end up out of pocket.

The right mortgage broker can help you out here. They can weigh up the pros and cons of each option and help you make the most cost-effective choice.

Can I add someone with bad credit to my mortgage?

Yes, as long as their bad credit isn’t severe enough to prevent them from meeting your mortgage lender’s eligibility criteria. If you’re remortgaging to a new agreement with a person who has bad credit, keep in mind that this could affect the overall strength of your application, and this could mean higher rates or needing to put down more deposit.

If you’re adding somebody with bad credit to your mortgage, seeking advice from a mortgage broker is recommended. They will be able to introduce you to specialist bad credit mortgage providers who have the flexibility to base their lending decisions on the age, severity and reason for the borrower’s credit problems.

Can I add someone who’s self-employed to my mortgage?

Yes, and the only difference this will make from an affordability standpoint is the way their income is assessed. The mortgage lender will base the amount they can borrow on the accounts they provide to evidence their income, and some are more generous with their calculations than others. You can find out more in our guide to self-employed mortgages.

Can I join someone else’s mortgage if I have a criminal conviction?

If you have previous convictions that are spent under the Rehabilitation of Offenders Act 1974, you do not have to disclose these convictions and can apply to join the mortgage through the normal process. You may need to declare convictions that are unspent.

But the good news is that it’s still possible to get a mortgage with a criminal record, under the right circumstances. Your best bet is to speak with a specialist advisor who will be able to talk through the options available to you.

Why Use OnlineMortgageAdvisor?

No matter your mortgage situation, we’ve got you covered. Our mortgage experts support you from start to finish of your application. We specialise in complex changes like adding or removing someone from a mortgage, and can offer you tailored mortgage advice to help you through the process.

With access to hundreds of lenders, your dedicated mortgage adviser can find the best possible mortgage deal for your circumstances. We’re so confident in our service that we guarantee it – if you find a better mortgage deal elsewhere, we’ll give you £100*.

Call 0330 818 7026 or make an enquiry for a free consultation and a member of our team will explain exactly how we can help