How to get released from joint mortgage?

awnow

Hi, my fiancée and I have received a mortgage offer from a lender to build our house but with a condition attached that says approval is subject to my being released from my joint mortgage on another property I currently have with my brother. My question is, is there any way I can get released from this mortgage without my brother having to reapply? Is it worth consulting my solicitor for direction?

According to the bank, if he has to reapply, he would not qualify under 'capacity to borrow' and because the house is in 'negative equity.' I do not have any other siblings who would be able to step in and take my portion of the loan but I do have someone who would be willing to act as garuntor in whatever way we wish. For the record, my brother wants the property in his own name so the only party who are objecting is the lender. Furthermore, my brother has proved he can meet the repayments. As things stand, we cannot proceed with the building of our new dwelling despite numerous loan offers for our new build, but all on the condition that I am RELEASED from the joint mortgage. Would be grateful for any advice. I'm sure this is becoming more common in the current climate. Being held to ransom by a bank...who would ever have thought it?!:rolleyes:

Bankguy

This situation is tricky, but you should be able to manouver the necessary outcome.

At present the bank which has the mortgage with your brother has both you and him on the hook, joint and severally. You need your name removed from the title, but you do not necessarily have to remove yourself from the debt. Option 1 to get what you want is to ask the bank to transfer title to your brothers name and the loan to his name, but you remain 'a mark' as guarantor. You just don't tell the other bank about it.

Option 2 is a similiar scenario but you replace your guarantor for the 3rd party guarantor you already mentioned - much better for you.

Before engaging a Solicitor, see what the other bank want to hold as a minimum to allow you get what you want - your name removed from the loan. This could be cash, collateral security or the introduction of a strong guarantor. Good luck!!

awnow

Thanks Bankguy.
Is the best approach to WRITE a letter to the bank requesting that the title & loan be transferred to his name and that I (or 3rd party) would remain as guarantor? My brother and I would both sign it. If writing a letter, address to Head of Mortgages rather than local branch advisor?

Bankguy

These things are best done in person and if you or your brother have any local contacts, I would use them. The system will want to say no, you need to convince them as to why they could help you, keep the risk the same and say yes. Local influence tends to work best in these situations.

awnow

Yes. The bank basically told me we "were stuck" and that there "was nothing we could do at the minute." I wonder what they put that in writing.

I'll post back how I get on as I'm sure there are loads of other people in the same boat. In that vein, if anyone has overcome this predicament please shout.

phormium

The reason they want you 'released' as they put it is because in the eyes of their underwriters you are liable for that other mortgage same as you would be for any other loan outgoing you had from an underwriting point of view. If for any reason your brother cannot keep up repayments you are liable so the bank are technically correct in not allowing you to borrow another amount that would make your potential repayments higher than is allowed under whatever guidelines they are now using. I know that is frustrating for you but if your brothers income is insufficient to support a mortgage on his own & that bank have you on that mortgage for the very same reason, so that you will be liable if something goes wrong, then the only option is to replace you with someone else on his mortgage who has the income required. Changing the name on the deeds doesnt matter, bank isnt stupid, they are going to want to see your name removed from loan not deeds.

unclebill98

Your solicitor is the person to sort this out.

But you could be leaving your brother in a dangerous situation regarding payments etc.

awnow

As you describe it Phormium, this indeed is largely the banks view on things and is understandable. However, and most frustratingly, my brother has substantial capacity to meet the full monthly repayments and has, in fact, been making the full mortgage repayments on his own for some time now anyway. So I would have thought this is enough proof for the banks. But yes, in the eyes of the bank, I am still fully liable for the mortgage and it's obviously more secure from the bank's perspective to have TWO parties named on the loan. The bottom line for us is if my brother has to reapply, he will not qualify for the borrowings and even if he did, the bank say they would now approve the application on the grounds that the house is in negative equity by approx €45k. Is the use of a guarantor stepping in in some way our best option?

Any others viewers opinions welcome.