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Moving from a joint to a sole name mortgage

This article is part of
Guide to Mortgages and Divorce

The process of moving from a joint mortgage to a sole name mortgage is commonly known as a ‘transfer of equity’.

The first step in the process is getting the lender to agree to changing the mortgage from one in joint names to a sole name. The lender is under no obligation to do so and may require a revaluation of the house.

If sticking with the existing lender the divorcing couple would need to complete the lender’s change of borrower process, which can vary.

With a Nationwide mortgage, Tom Riley, head of product at the lender, says the process involves an interview, consultation with a solicitor, and compliance with lending policy and underwriting criteria.

Jeff Knight, director of propositions at Castle Trust, says: “Lenders have varying positions on maintenance payments as admissible income and may insist that both partners stay on the mortgage.

“If partners agree and the lender is agreeable there is a process called transfer of equity in which one of the partner’s rights and obligations as owners and mortgagors is transferred to the other.

“Specifically the new ownership must be recorded by the Land Registry and the mortgage lender amends the mortgage agreement. If one of the joint owners is making a substantial payment to the other, stamp duty may be payable.

“If the existing lender is not agreeable it may be possible to replace them with a new lender by remortgaging.”

Ronan Marrion, mortgage adviser, Cornwall-based Worldwide Financial Planning, agrees in some cases it may be more appropriate to obtain a new mortgage (remortgage) and replace the existing one.

He says: “If it is necessary to obtain a new mortgage the new single borrower will need to be able to demonstrate affordability for the new mortgage in their own right.

“This can cause problems as generally the original mortgage was based on the couple’s income versus just one of their incomes.”

Mr Marrion notes various fees are involved in moving the mortgage, such as valuation fees, lenders arrangement fees and costs associated with bringing in a solicitor to pay off the old mortgage, start up the new one and ensure that the property is moved into one name.