Hi, we are in the process of splitting assets and my STBXH wants to buy me out and pay me capital less the mortgage. He has approached the mortgage company regarding putting it in his name only, but much hemming & hawing. If they refuse to do this, can we draw up an indemnity agreement releasing me from having to pay mortgage? This situation must come up fairly regularly in divorces; how is it handled?
No, I would imagine only the mortgage company can release you from paying the mortgage, they may not let him have it I'm his name as they don't think he would manage it alone or want 2 people to come after if he defaults. There's nothing stopping you drawing up a contract between yourselves with him promising to pay mortgage but if he defaulted they would be entitled to pursue you both for monies owed. His options are remortgage with another company himself or sell up. If you wanted to keep it in both names, house and mortgage, then you could take the amount you are due just now, and perhaps have a formal agreement whereby if it sells he gets the full proceeds after paying mortgage. But I've never had to do this so don't know how legally sound it is.
Agree with GreatUncleEddie on this one. There won't be any indemnity that will release you from your joint and several liability I'm afraid. Yes this comes up in divorce matters all the time. Problems arise like this and one party cannot get ther mortgage on their own due to the economic climate and lending criteria being so strict.
My solicitor has advised that a Deed of Indemnity is possible, but that it is only ad good as the person signing it. In our case, if he cannot be granted the mortgage in his sole name, I would go for this as he is paranoid about his credit rating. Also, mortgage expires next year, so risk is low.
I am in similar situation in so far as i have a joint mortgage with my ex. We are currently going through divorce as he left me for someone else. He is now in rented accommodation with her and her 2 kids. We are currently in negative equity so selling the house at this point is out of the question. My family are helping me with mortgage payments as i am currently on benefits as full time carer. My ex does not contrubute towards mortgage despite being jointly liable. Lenders will not remove him from mortgage despite me requesting they remove him and agree a guarantor or doing a transfer of equity. In fact the only solution they are offering is that i sell how and then address shortfall. But if i do that the homeless officer has advised i am intentionally making myself and my girls homeless and therefore do not qualify to be rehomed. I am totally at a loss as to what to do and feel so insecure as he could remove himself from mortgage at any point or so i am told. any pointers would be much appreciated please
The court can order him to transfer it to you but you'll have to indemnify him re future losses. That's ok if you're there for the long term, as hopefully the value of the property will eventually increase to greater than the mortgage debt. As you need the house for the kids the court is unlikely to force its sale.
Yes so if the person has few assets the indemnity will not be worth the paper it is written on.
I think a better course is usually to find a parent or sibling of the spouse who will guarantee the mortgage or more likely to go on it as co-borrower in place of you. I looked at that when my daughter bought her first place recently - they seemed to prefer the parent on the deeds even if their share is 0.1% of the equity than a traditional guarantee although in the end they accept her on her own.
Yes and my husband was advised not to leave the house until the mortgage was out of his name, the cash in his bank account and the house transfer into my name which can also be sensible as some of these undertakings are given when it is pretty clear no way in a month of Sundays will the lender ever release the other partner from the mortgage. Put time limits on as well perhaps.
Thanks for useful replies, esp Babybarrister. We are going down thaDeed of Indemnity route; it is voluntary, but there is substantial equity in the property and my STBXH will not want to sully his credit rating.