How To Remove Someone From A Mortgage
Removing a name from a mortgage isn’t always easy, but it can be done. It’s sometimes a necessary step following a separation, divorce or even when joint owners, still on good terms, decide to go their separate ways. If you’re wondering how to get out of a joint mortgage or what steps you need to take to buy out a partner / joint borrower from yours, it can seem a complex process.
We’re a highly-rated mortgage broker in Essex and we’ve helped many clients to do this. To help you understand the process, we’ve answered some of the most common questions we get and provided some key tips to streamline the process based on our experience. If you’d like to speak to us about your situation; we offer a no-obligation, free initial call – book yours here.
Why are we removing someone from a mortgage?
Before we take a look at the process involved in removing a name from a mortgage, why would you need to do it in the first place? There are several reasons for taking a name off a mortgage, but the most common include:
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Divorce or separation
This is one of the most common reasons. When people take out a joint mortgage but then separate, one party might need to be removed in order for the other to take sole ownership and responsibility, avoiding any future disputes or liability. This is often also accompanied by a transfer of equity, where a name is removed from the title deeds at the same time.
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Change in financial circumstances
If one person can no longer contribute, or no longer wants to contribute to the mortgage payments, then removing them might simplify matters and transfer responsibility to the remaining party.
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Refinancing opportunities
Removing a name from a mortgage is not just something you do following a separation. It can also be a chance to refinance, removing a co-borrower so one party can take advantage of a lower rate or better terms on their own. This is sometimes where one party has bad credit and being named on the mortgage would negatively impact the rate.
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Estate planning
Property ownership and mortgage arrangements can change as part of estate or inheritance tax planning.
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Simplifying liability
Mortgages create shared liability for payments and debt. If one person no longer wishes to be tied to the property or the financial obligation, removing them can clarify financial responsibilities.
Steps for removing a name from a mortgage
Whatever the reason might be, if you’re wondering how to remove someone from a mortgage, the process can actually be very straightforward as long as all parties are in agreement and the numbers stack up. Here are the steps to consider:
Step one: Assess your situation
The first thing you should do is thoroughly assess the overall situation. Are all parties in agreement? Is there an ability to transfer financial responsibility, can the mortgage be transferred to an individual without impacting repayments? Make sure you are aware of the risks and implications and ask for clarification on anything you’re not sure on.
Step two: Speak to your mortgage broker
The next step is to review your current mortgage terms and speak with your mortgage broker. A mortgage broker will help you understand whether you have the financial capacity to take on the mortgage independently and will undertake affordability checks to verify your income, expenses and credit history. They will also discuss the property valuation and loan to value (LTV) requirements lenders will have. They’ll also give you an indication of whether stamp duty may be payable. There are circumstances where the transfer of equity will be exempt from stamp duty, but also many occasions where tax is payable. It’s important to understand the potential implications from the outset.
Step three: Refinance or remortgage
In most situations, removing a name from a mortgage involves remortgaging to a new mortgage lender under the name of the remaining borrower. A mortgage adviser can help you decide which mortgage lender is best when taking a name off a mortgage. It’s at this point the application is made and you’re one step closer to fully removing the other name from your mortgage.
Step four: Update the title deeds
Removing a name from the mortgage usually goes hand in hand with updating the ownership details of the property. This involves a legal process known as a transfer of equity, whereby the departing party transfers their share of ownership to the remaining borrower. If the departing party is compensated for their share of the property, the process may also include financial arrangements for the buyout. A solicitor will typically assist with updating the Land Registry to ensure the ownership records are accurate, as well as ensuring any Stamp Duty is paid accordingly.
Step five: Complete and finalise
Both parties will need to sign the necessary documents and ensure all administrative fees have been paid. Once all the conditions have been met and the lender is satisfied, they will update the mortgage account and send written confirmation.
Buying someone out of a mortgage
Joint mortgages usually dictate a shared ownership of the property in question. That means when one party leaves, they will be entitled to a share of the equity accrued in the property. Your solicitor will be able to help provide you with the necessary paperwork and ensure that the balance is paid upon completion.
While this might seem complex, it can often be finalised within a month or two if everyone is in agreement. We’re a firm of Essex mortgage brokers who have lots of experience in removing someone from a mortgage so please speak to us as we’d love to help.
What if someone isn’t paying their share?
Removing someone from a mortgage because they’re not paying their share is unfortunately very common. While this can be frustrating, it’s important that you continue to make your payments, so your credit report is not impacted. You’re each responsible for the whole mortgage debt, not just part of it.
If your partner is no longer making the payments, speak to your lender as soon as possible. They may allow you to take a mortgage payment holiday while you get the necessary changes implemented or provide an alternative option such as interest only.
Top tips for removing a name from a mortgage
While removing a name from a mortgage can potentially be stressful, with a specialist mortgage broker and solid financial advice, it doesn’t have to be. Some top tips to remember to make the process as straightforward as possible:
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Seek advice early
Consult financial advisors, solicitors and mortgage advisors as early as possible in the process. This will help you understand all of the possible implications and allow you to better prepare.
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Collaborate and be open
Being as open as you can with the other party and ensuring regular collaboration and communication will help to minimise misunderstandings and facilitate a smoother process.
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Prepare your documentation
Make sure you have your proof of income, property valuation and other key documentation ready to go. This will help save time and effort later on.
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Check your mortgage terms
Take the time to review your mortgage terms and identify any clauses that are relevant to removing a name from a mortgage.
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Be realistic
Finally. Make sure you’re realistic about the costs. From solicitor fees to potential penalties to stamp duty, there will be a number of expenses involved so make sure you are aware and plan for these.
Frequently Asked Questions
How to remove someone from a mortgage without refinancing?
Removing someone from a mortgage without refinancing is sometimes possible. However, the existing mortgage lender must approve the change, confirming the remaining individual’s financial capacity to handle repayments independently.
Can you take someone off a mortgage?
Not always. Ultimately, if the affordability checks mean that the remaining borrower would not be able to service the mortgage on their own, nothing will be allowed to change. However, remember that different lenders will have different amounts they are comfortable lending you, so it’s key to speak to a mortgage advisor to ensure you know your options.
Can you remove someone from a mortgage without their permission?
No, this would always need to be agreed by the other party and your mortgage lender. The mortgage will have been offered on the basis of all names currently on the mortgage. The lender will want to ensure that if someone is removed from a mortgage, the remaining party can afford the repayments independently. Removing someone from a mortgage doesn’t always mean they no longer have a stake in the property. A separate exercise, known as a transfer of equity, needs to be done to remove them from the title deeds too.
How much does it cost to take someone off a mortgage in the UK?
Costs can vary widely based on your specific circumstances. Expect fees for:
- Mortgage arrangement or administrative processing. These can sometimes be added to the mortgage borrowing.
- Solicitor / conveyancing services, typically ranging from £500 to £1,000.
- Stamp duty (if applicable).
Do I need a solicitor to take my name off a mortgage?
In most cases, a solicitor or conveyancer is necessary to handle legal documentation, particularly in a transfer of equity. Their expertise will also ensure that all documents comply with local laws and lender requirements.
What happens to a joint mortgage after separation?
Separation or divorce doesn’t dissolve your mortgage liability. Even if one party moves out, both remain responsible unless specific steps like those above are undertaken to adjust the agreement.
Need independent financial advice?
Are you in need of independent financial advice? Whether you’re looking for help with removing someone from a mortgage, are considering remortgaging, or are interested in financial planning, our team at Fairview Financial Management is here to help you every step of the way.
