Joint Mortgage Advice

Nelbell

Don't know if this is the right place to post, but my head is so muddled, I honestly can't think straight any more! OK I'll try explain this as coherently as possible.... I have 2 joint mortgages with a friend. He also has his own mortgage. This was all fine when times were better, but lately he has said that he can no longer afford to pay his portion of the joint mortgages, due to pay cuts etc. None of the mortgages are currently in arrears but he said he is willing to let the joint mortgages go in to arrears as he can no longer afford them, and is obviously not willing to lose or sacrifice his home. I can afford to meet my portion of the joint mortgages. Myself and my bf are hoping to get our own mortgage within the next year or so but I'm worried my credit rating will be affected if my friend defaults on his portion of the joint mortgages. It's really putting a strain on our friendship. What are my options or do I have any? There was no legal agreement drawn up when we purchased both properties, as foolishly I never thought this day would come. Is there any way I can come out of this unscathed?
Thanks

phormium

I'm afraid you have a big problem here. If repayments are not made in full each month then it will eventually affect your credit rating too, paying your portion will not matter. In fact there is no such thing as your portion, practically all mortgages are 'joint and severally liable', in simple language that means that you are both liable for the full mortgage so it one does not or cannot pay the other is liable for the full amount of the repayments. So as far as the bank is concerned there is just one repayment, not your share and their share. Best option is for both of you to approach bank to see if repayments can be reduced to interest only or some option that you can afford. TBH with two mortgages already in your name I wouldn't fancy your chances of getting a third one anytime soon, now obviously you could have a huge income I don't know about and your properties might not be in negative equity etc etc but most banks would consider you overexposed to property at the moment.

chris85

phormium wrote: »

I'm afraid you have a big problem here. If repayments are not made in full each month then it will eventually affect your credit rating too, paying your portion will not matter. In fact there is no such thing as your portion, practically all mortgages are 'joint and severally liable', in simple language that means that you are both liable for the full mortgage so it one does not or cannot pay the other is liable for the full amount of the repayments. So as far as the bank is concerned there is just one repayment, not your share and their share. Best option is for both of you to approach bank to see if repayments can be reduced to interest only or some option that you can afford. TBH with two mortgages already in your name I wouldn't fancy your chances of getting a third one anytime soon, now obviously you could have a huge income I don't know about and your properties might not be in negative equity etc etc but most banks would consider you overexposed to property at the moment.

Agree with this also.

Both equally and severally liable is important. You both took out the mortgage to pay full balance. The bank didnt give mortgage on basis you would each pay half of it each month. That was agreed between you and your friend.

If a default occurs then credit rating for both are affected. As well as legal action could be taken against you also.

Also a fourth mortgage? I presume you earn good income but four mortgages for anyone is just madness.

Are the joint mortgages in negative equity?