How Can a Joint Mortgage Be Transferred to One Person?

Can a joint mortgage be transferred to one person? Is this the big question pushing you back and forth? If yes, you have come to the right place. Here you’ll get all you need to know about removing someone from a joint mortgage.

What is a Joint Mortgage?

A joint mortgage is when two or more persons seek a mortgage from a lender. In most cases, the second person is the first person’s spouse or partner. But it isn’t a rule. The other person can also be a sibling, parent, friend, or business partner of the first person.

To apply for a joint mortgage, the lender(s) will first look into several aspects, including the income, debts, and credit scores of each applicant. If they like what they get, they may accept your application and offer you the required sum. Else, the lender(s) can reject your application.

Difference Between a Joint and a Single Applicant Mortgage

A joint mortgage is quite similar to a single-applicant mortgage. In both cases, the lenders will look at the applicant’s income, debt, and credit score. The difference comes when there’s a combined effect of each partner’s income, debt, and credit score.

For instance, if you have $2,000 in student loans and your mortgage partner owes $3,000 on a credit card, the lender will consider the application with a total debt of $5,000. The combined effect is quite disturbing for the lender and may lead to a rejection of your application. On the other hand, if the combined effect of income is better, the lender may accept your application and grant you the desired mortgage amount.

For a single-applicant mortgage, the lender(s) will again look into similar factors (income, debt, and credit score). The better the score, the better chances for mortgage approval.

Can a Joint Mortgage be Transferred to One Person?

Not to the big question, can a joint mortgage be transferred to one person?” The answer to that is a big YES. However, the process can require some additional steps and fees.

Before scoring a joint mortgage, you should first know if you can transfer the joint mortgage to a single-applicant mortgage in the future or not. If your lender or the local laws doesn’t allow that, you must make a better initial decision.

The process of transferring the rights of a joint mortgage to one person (or a new person) is known as the transfer of equity. Here you may remove a name or transfer the rights to a new person, removing all the existing mortgage members. The new member can be your sibling, parent, friend, or business partner.

How to Transfer a Name from Joint Mortgage?

The “transfer of equity” (or transferring from a joint mortgage to a single-applicant mortgage) is a legal process. The word “equity” here means the portion of the property you legally own. It’s the amount you’ve paid for the property before getting a name off the joint mortgage. Remember, taking a name off the joint mortgage doesn’t necessarily mean it’s a case of separation between two partners. The transfer can be for any reason, and lenders take it equally.

Pre-requisites of Joint Mortgage to a Single-applicant Mortgage

The whole process of removing a person from a joint mortgage or adding a new member requires an interview, consultation with a solicitor, and compliance with lending policy and underwriting criteria. The lender can also insist the existing partners avoid making any changes to the initial terms and continue as they first agreed.

When splitting up, the couple must also remember the extra charges they’ll need to pay, which may include valuation fees, lenders arrangement fees, and costs associated with bringing in a solicitor to pay off the old mortgage.

Steps to Transferring a Joint Mortgage to One Person

To start the process of transferring from a joint mortgage, you first need to communicate the same to the mortgage advisor and solicitor. Following that, your solicitors will prepare the necessary title transfer documents and then send them to you. There is usually an extra fee for that.

Once everyone agrees to the new terms, the process is completed. The process may take as little as one day.

Once the process is completed, the remaining member (or the new member) will now hold the rights to the joint mortgage and then hold the responsibility of paying off the mortgage.

The whole process of splitting up the joint mortgage to one person must be recorded by the Land Registry and the lender must also amend the agreement.

If one member of the joint mortgage is making a big payment, there may come a requirement for stamp duty.

What if the Lender(s) Doesn’t Agree?

If the lender(s) doesn’t agree to the transfer, you may look for a new lender. According to Ronan Marrion, mortgage adviser, Cornwall-based Worldwide Financial Planning, it’s often better to look for a new mortgage when splitting up a joint mortgage. However, the partners may face difficulties as previously it was the couple’s income and now it’s just one of them. Whether it’s a new lender or not, the current lender must agree with the change.

Pros and Cons of a Joint Mortgage

Here are a few pros and cons of a joint mortgage. There are certainly more when you go out to ask a professional about the mortgage.

Pros

1. By combining your incomes, you may qualify for a higher loan amount. 
2. If one partner loses the job, the other person can cover the expenses.

Cons

1. If one person has a bad credit score or a debt-to-income ratio, it may affect your chances of loan approval.
2. If one partner misses a payment, it affects everyone, making it critical to refinance in the future.

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