Guide To Removing A Name From A Mortgage: Everything You Need to Know

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When buying a home or any other property, sharing the mortgage with a partner, friend, or family member can be a beneficial decision. It can increase your buying power, lower your monthly payments, and make your mortgage application more attractive to lenders.

However, it’s important to understand that joint mortgages also have their own risks. An unexpected change in circumstances could make you want to remove someone from the mortgage and have it transferred solely to your name. 

This guide will walk you through the process of removing a name from a mortgage, including the potential costs, crucial steps in making the change, and the best way to handle any challenges along the way. Let’s get started.

How To Remove A Name From A Mortgage

If you’re currently a part of a joint mortgage and looking to remove someone’s name from it, there are two things you’ll need to take care of: the legal process and the mortgage process. Here’s an overview of both so you’ll know what to expect:

1. The Legal Process – Working With a Solicitor

You’ll need the assistance of a conveyancing solicitor to handle the legalities of the mortgage transfer. They will provide you with the necessary paperwork, which you must complete with your information and return to the solicitor as soon as you can. 

During this process, the solicitor will also review your title deeds, request written consent from your mortgage lender, and may ask you to sign a Transfer of Equity document. This is all part of their standard remortgage package, and the legal costs are usually around £100 to £200.

When all of the required documents are ready, your solicitor will then work with the Land Registry to formalise the change in your mortgage and ownership structure. This part can take several weeks, and you may incur an additional fee that’s dependent on your property value.

Agreement Of Parties

If all parties, including your lender, agree to remove the name from the mortgage, the legal process can be quick and straightforward. On the other hand, things can get complicated, costly, and time-consuming if one party agrees to the removal, while the other doesn’t.

That’s why it’s important to thoroughly discuss your decision to remove the other party from the joint mortgage. Work together to reach an understanding or compromise early on. In this way, the stress and hassle of legal challenges and potential court action can be avoided.

2. The Mortgage Process – Applying For A New Mortgage

The process of removing someone’s name from a joint mortgage is quite similar to remortgaging. You’ll need to apply for a new mortgage in your name only, with your current lender or a new one, effectively paying off your existing joint mortgage. 

The first step is to carefully examine the terms of your existing mortgage to decide if it’s still the right option for your needs. At this point, it’s a good idea to explore the market or consult an experienced mortgage broker to help you find and switch to a better deal.

When you apply for a new mortgage, the lender will check your creditworthiness. They’ll also assess your finances to ensure you’re able to afford the mortgage repayments on your own. 

Supporting Documents to Prepare

As part of your application, you’ll need to provide evidence of your income sources, credit history, and financial situation to prove that you’re eligible for a new mortgage in your name. Your lender may ask for the following supporting documents from you:

  • Bank statements
  • Payslips
  • Proof of address (Utility bills)
  • Latest P60 tax form
  • Tax returns or accounts (for self-employed)
  • Passport or driving licence

Once the lender receives your application form and supporting documents, they’ll start reviewing your mortgage application. Credit checks will be run and a property valuation may be necessary to determine the current value of your home. 

Mortgage Fees and Costs

Depending on your mortgage lender, there may be fees associated with removing someone from your joint mortgage. It’s best to pay them immediately to avoid any processing delays.

Your lender will also let you know of the charges for the new mortgage in your name. They should be indicated in the Mortgage Conditions packet provided to you as part of the mortgage offer. Here are some common costs and charges to be aware of:

    • Change of parties administration fee: Covers the lender’s administrative costs whenever a party is removed, added, or replaced in a mortgage
    • Early repayment charge: Applicable if you switch to a new mortgage product or lender and/or if you repay your mortgage in full before the end of the mortgage term
  • Mortgage account fee: An additional fee for creating and managing a new mortgage account in your name
  • Valuation fee: The cost of the lender’s valuation report that’s used to calculate the total amount they will lend you. 
  • Product fee: An amount charged for certain mortgage products as part of the deal. It can be paid up-front or added to your total mortgage cost.

Buying Someone Out Of A Mortgage

When two parties are in a joint mortgage, it usually involves sharing ownership of the property. 

So, when one party is removed from the mortgage contract, they may be entitled to a share of the equity that the property has accrued, especially if they’re on the title deeds, contributed to the deposit or monthly payments, or helped fund improvements on the property.

“Buying someone out” simply means paying the other party’s share of the equity so that you can remove them from the mortgage and relinquish their ownership of the property. You can either pay them a lump sum from your funds or release equity from your new mortgage.

If you choose the latter option, it can increase the cost of your new mortgage. Upon completion, the removed party will receive money for their share and will be taken out of the title deeds. It’s also possible to remove someone from a mortgage without a buyout, but all parties must agree to it and the lender must approve it.

Joint Tenants vs. Tenants In Common

One important thing to remember is that the amount of equity each party has in your property depends on the type of joint mortgage you have. 

In a “joint tenants” mortgage, both parties have equal equity in the property. They also have equal rights, which means they’ll get the same share of profits if the home is sold. 

Meanwhile, in a mortgage that’s referred to as “tenants in common,” there is no 50/50 split, as ownership percentages are determined by an agreement between the parties. 

One party can have a bigger equity share than the other, possibly because of a higher contribution toward the deposit or mortgage payments.

Things To Consider Before Removing A Name From A Mortgage

A clear understanding of the potential costs and risks of removing someone from a joint mortgage is key to a smooth and successful transaction. 

Here are some important aspects to think about before going ahead with your decision:

1. Financial Responsibility

Removing a person’s name from a joint mortgage also removes their financial responsibility to make payments. This will increase the remaining party’s monthly cash outflows, which could put a strain on their budget, especially if the leaving party was a large contributor to the payments.

Before committing to this decision, it’s advisable to take a look at your income and spending to make sure you can afford the repayments on your own, without overstretching your finances.

Note that your home is at risk of being repossessed if you don’t keep up with the repayments.

2. Share Of Equity

Both parties in the joint mortgage should agree on how to fairly divide the equity in the property. This can be tricky, especially if one of you has made significant mortgage payments while the other has paid little or nothing. You may need a lawyer or mediator to help with this process.

If you need to borrow more money in your mortgage to buy out the other party’s equity share, you should also reach an agreement on this amount before you apply for a new mortgage. 

3. New Mortgage Costs

Getting a new mortgage solely in your name typically involves fees, such as product fees, valuation fees, early repayment charges, and other lender fees. It’s vital to understand these costs, estimate how much you’ll need to pay, and factor this into your decision-making.

To help you make the right choice for your finances and prevent you from making any costly mistakes, you might want to reach out to a qualified mortgage advisor or broker. 

They’ll have wide expertise on mortgages that suit your needs and can search the market on your behalf to find the best deal. They can also improve your chances of being accepted.

4. Credit Score

When you previously applied for a joint mortgage, the lender considered the credit score and financial information of all parties involved in it. Having multiple incomes and a co-party with a good credit score could have helped you get approved and qualified for a higher loan amount.

As a result, removing the other party’s name from the mortgage can have an impact on your credit score. It could make your new mortgage application less attractive to lenders, especially if the leaving party had a great score and you have a big outstanding balance in your mortgage.

5. Interest Rates

Before finalising your decision to get a new mortgage without the other party, take a look at the current mortgage interest rates on the market. If the rates have increased since your previous mortgage, you might end up with a bigger interest rate and higher monthly payments.

Reasons For Removing Someone From A Mortgage

Many factors can contribute to a decision to remove a name from a joint mortgage, including:

1. Separation Or Divorce

The most common reason for getting out of a joint mortgage is a divorce or separation. When this happens, one party usually wants to remove their previous partner from the mortgage so that they can permanently cut financial ties and move forward with their lives.

The same also applies if one party wants someone else to replace their previous partner on the mortgage and title deeds. Adding a new person while removing someone from the mortgage can make it easier to get approved by a lender and pass their affordability criteria.

It’s also possible for friends or family members who are in a joint mortgage to want to go their separate ways and ask to be removed from the contract.

2. Financial Disagreements

A change in income levels, opposing financial goals, and a desire for independent decision-making could lead one party to want to remove the other from the joint mortgage. For instance, the other party may want to sell the property, while you’d prefer to hold on to it.

You may also find yourself in a situation where the other party refuses to pay their share of the mortgage payments. When this happens, speak to your lender immediately. They may provide you with options, including a “mortgage break” or “mortgage holiday” while you find a solution.

Remember to continue paying your mortgage in full to protect your credit report and avoid the risk of losing your home. If you fail to meet the combined payments, it will show up on both credit reports, which can hurt your future mortgage or loan applications.

3. Loss Of A Loved One

When a relative or family member who is part of a joint mortgage with you has passed away, you’ll need to inform your lender. In most cases, the mortgage will be transferred to the name of the remaining party and your loved one’s name may be removed from your mortgage account.

Usually, the monthly payments will continue, and if you don’t keep up with them, the mortgage may fall into arrears, which could affect your credit rating. If you’d like to make changes to the terms of the mortgage, you may want to speak to your lender or consult a mortgage adviser.

4. Removing An Investor

If an investor no longer wants to continue doing business with you and decides to pull out their investment in the property, the typical route would be to remove them from the mortgage and title deeds. This involves a transfer of equity, in which you’ll have to pay them for their share.

Other Ways To Remove A Name From A Mortgage

There are a few alternative ways to remove a person’s name from a mortgage. One of them is to agree with the other party to sell your property. The proceeds from the sale will be used to settle your existing mortgage and related costs, and any equity can be divided among you.

Once the total amount is paid off, your names will no longer be attached to the mortgage. If you’d like to continue living in the property and selling is not an option, you can remove the other person’s name and agree to sell their share of the property to a third party instead.

Another option would be to remove the person’s name by entering into a new mortgage on your own and to rent out the property to help you pay for the mortgage payments. However, keep in mind that becoming a landlord involves a fair amount of property management tasks.

You’ll also need to consider the legal and financial implications of renting out your mortgaged property, including taxes and landlord-tenant laws.

Planning To Remove Someone From Your Joint Mortgage?

If you’re currently part of a joint mortgage and are looking to remove someone from it due to a divorce, financial disagreement, or the removal of an investor, there are several steps you can take to make the change, legally and financially.

Depending on your circumstances, the process can be simple or it could be complex and time-consuming. It’s best to be aware of the risks and costs of the transaction and to ensure the agreement of all parties before making a final commitment.

Our expert mortgage brokers and advisors here at When The Bank Says No are always available to answer your questions, help you get started, and guide you through the process of removing someone’s name from your joint mortgage. Reach out to one of our experts today!

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Emma Jones
Emma Jones
Emma began her career in Lloyds Banking Group, first in the unsecured & secured loans department at Halifax and later as a mortgage advisor at Lloyds. During 9 years in these roles and a further 2 years at Yorkshire Building Society, Emma was able to observe the impact of the recession, and how the banks let their customers down by denying loans and mortgages. Wanting to be a driving force for change, she stepped into a market advice role where she has been able to help clients when others couldn’t. Identifying a gap in the mortgage space, Emma went on to establish When the Bank Says No. As a keen property investor, she has been the focus of features in publications including The Sunday Times and This is Money. Emma’s greatest joy is overcoming the low expectations of their customers, many of whom have all but given up on getting a mortgage due. One thing Emma has learned through her own personal struggles is every client must be treated like a human and understood better by advisors and lenders in the industry. “We all have to navigate life events which can ultimately impact your financial status. It shouldn’t mean dreams of homeownership or business growth should have the breaks applied”. Emma and her team’s passion for helping people overcome the challenges they may face when applying for a mortgage have fuelled the success of When the Bank Says No.

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