Mortgage in my husbands name only!

[Chloe1973]

I have been with my husband for 16 years, married for 6 years. We have two children (5 years and 13 years old). We currently have a joint mortgage on our family home which we have now outgrown. We recently found a really amazing home just outside of London which we want to buy. We initially applied for a joint mortgage which was denied due to my bad credit. The mortgage advisor then tried with just my husband and the mortgage was accepted. My husband asked me how I felt about this and what I wanted to do i.e wait until my credit improves which may take years as I have 2 defaults. I feel sad to even question this but I worry that if (worse case scenario) our marriage breaks down then I’ll be stuffed! Although our marriage is currently very strong we have had some trust issues in the past. Should I go ahead and move forward with this purchase or wait until we have rebuilt my credit? We are keeping our current home to rent so will still have this home.

Are you in Scotland? Because if you are then laws about property and marriage are very different from England and people might not be giving the correct information.
Otherwise ... as you were

Just to cover a few points - it’s not as simple as “adding you later” that is a disposal of property and will attract a stamp duty. So it’s unlikely to be worth doing for the sake of your name.

Yes but may affect the closing application as lender can do another credit check at anytime before they release funds and they will query why I'm on deeds and not on mortgage which may cause issues Both the charge (the mortgage) and the transfer (the purchase of the property) are registered at the same time post completion. Your name will not be on the deeds before that. But that aside, your solicitor will act for both you and your lender and as such cannot just add your name to the property without first informing your lender. There’s no way around this other than to be upfront.

Our deeds and mortgage are in my husband’s name only as he was able to borrow more/easier without me on the application. I don’t have bad credit or anything I just didn’t earn very much and now am a SAHM

I'm afraid this isn't true.

Your own earning has nothing to do with whether, or indeed how much he could borrow.

Lots and lots of SAHMs have joint mortgages whilst having zero income.

Just to cover a few points - it’s not as simple as “adding you later” that is a disposal of property and will attract a stamp duty. So it’s unlikely to be worth doing for the sake of your name

No, this isn't true either, you can remortgage into joint names at any time.

Remortgaging obviously isn't disposal of a property and doesn't attract SDLT.

You may need to complete a Declaration of Trust, but that's about it.

@NikeDeLaSwoosh

I’ve seen this scenario a few times, Mrs/partner isn’t included in the mortgage application because of a lack of income. You’re quite right it doesn’t matter who’s income is paying the mortgage so long as the combined or sole income is sufficient. I’ve told clients this and they’ve gone back to their broker rectify it countless times. Honesty I think its brokers going for the quickest option.

@NikeDeLaSwoosh a remortgage and transfer of equity is a disposable for the purposes of SDLT.

If OP isn’t on the title then remortgages with DH later, DH will be transferring an interest in the property.

Not having your name on the mortgage isn't such an issue if you are married, but there are some things that you may need to do.

A relative wasn't on the mortgage or deeds of the marital home. When the marriage broke down due to domestic abuse, she registered her home rights with the land registry. The financial settlement is almost sorted and she will get 70% of the equity in the house.

Registering home rights is vital and easy to do with a simple form. Would your husband understand if you did this at some point after purchasing your home. If not it can be left for a later date if things become difficult again. You don't need his permission to do this.

@NikeDeLaSwoosh

www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property

Example 2 - you pay SDLT even though no money changes hands
The owner of a property valued at £500,000 with an outstanding mortgage of £400,000 transfers half the property to their partner when they marry. Their partner takes on 50% of the mortgage (£200,000).

HMRC charge SDLT on the amount paid for a property or the amount of ‘consideration’ given.

By taking liability for the mortgage, the owner’s partner has given ‘consideration’ of £200,000 for their share of the property which is £1,500 SDLT (0% of £125,000 + 2% of £75,000).

They must pay SDLT on that amount and tell HMRC about the transfer by filling in an SDLT return.

The equity isn’t included in the calculation as you only pay SDLT on the consideration given.

If you are keeping your current home and will rent it out, that implies you are quite wealthy- to be able to afford to buy a new house but not sell your current house. Obviously a lot depends on location but if you own a house in London, it must be worth quite a lot.

My concern is you are not hoping to rely on the rent from House 1 to pay the mortgage of House 2 because it' s always possible you would have periods with no tenants.

My other question is whether it makes sense to hold onto House 1 when selling it would mean a smaller loan for House 2.

You need to decide if the total cost of House 2 (which includes the interest on the mortgage over X years) is off-set by the income and appreciation of House 1.

Have you had financial advice as your are clearly in the property buying/ leasing business?

So no issue on the divorce bit. The equity in the house is the asset which gets shared (not the mortgage which is a debt).

We had similar situation when we bought first house as I had gone self employed and only had 1 year of accounts. My DH actually had to buy the house in his name. I spoke to solicitor who agreed because we were married I would be protected.

When we remortgaged 2 years later I had to go on the deeds and mortgage (couldn’t get mortgage otherwise) and others have mentioned we had to pay stamp duty.

[quote ZigZagPlant]@NikeDeLaSwoosh a remortgage and transfer of equity is a disposable for the purposes of SDLT.

If OP isn’t on the title then remortgages with DH later, DH will be transferring an interest in the property.[/quote]
No, it really isn't.

See here for further info on this point.

TL:DR

"If the transfer is a gift and there’s no consideration, SDLT doesn’t normally apply"

With respect, you are getting muddled up with situations in which there is payment (consideration) for the ToE, which isn't applicable in the situation described by OP.

[quote ZigZagPlant]@NikeDeLaSwoosh

www.gov.uk/guidance/sdlt-transferring-ownership-of-land-or-property

Example 2 - you pay SDLT even though no money changes hands
The owner of a property valued at £500,000 with an outstanding mortgage of £400,000 transfers half the property to their partner when they marry. Their partner takes on 50% of the mortgage (£200,000).

HMRC charge SDLT on the amount paid for a property or the amount of ‘consideration’ given.

By taking liability for the mortgage, the owner’s partner has given ‘consideration’ of £200,000 for their share of the property which is £1,500 SDLT (0% of £125,000 + 2% of £75,000).

They must pay SDLT on that amount and tell HMRC about the transfer by filling in an SDLT return.

The equity isn’t included in the calculation as you only pay SDLT on the consideration given.[/quote]
...but there is no consideration in this situation, or in any situation in which there is a straightforward remortgage simply to add someone to the deeds.

I've been on rental tenancies and a mortgage as a SAHM so it is possible.

But in mortgage terms, it counted as three dependents on one salary. So if having the dependents affects the mortgagability (might not be a real word!) of the sole/higher earner, I think that's why they get left off the application.

As people are usually equally liable for the payments, we've found that companies are more than happy for joint names as it's more people to pursue for money if the worst happens. That's obviously not the case where there are credit reference issues though.

My Dad moved into a new house yesterday with his girlfriend. They paid most of it off together by selling their houses and only he's on the mortgage. Both names are on the deeds.

@NikeDeLaSwoosh

The consideration is taking the mortgage debt!

I refer you back to the extract above, written in plain English.

By taking liability for the mortgage, the owner’s partner has given ‘consideration’

With respect - I am a solicitor who specialises in property.

Remortgaging and adding someone to the deeds are two separate issues - but ones that are dealt with at the same time.

Remortgage is one transaction.

Remortgaging into joint names requires owner 1 to transfer an interest to owner 2. a transfer of equity.

So there are two issues.

Consideration is not just cash.

Otherwise when you purchased a property SDLT would be based on your deposit and not the amount you mortgaged.

You can’t gift a debt - a gift needs to be an asset. You can only assign a debt. A debt belongs to someone else - you are indebted.

You have shared the same link I have, but have interpreted it incorrectly.

Ask the solicitor to add you on as a Registered Charge/Second Charge after the mortgage company.

@BraverThanYouBel1eve

I'm going through a divorce and can confirm there's no need for you to worry.

You should be able to do sole borrower, joint ownership though. That's what we planned to do (similar situation but in reverse). Mortgage broker was fine with it. One person with bad credit isn't uncommon.

But even if you don't do joint ownership, you're still entitled to 50% in standard divorce circumstances, when child custody is roughly 50/50. To put your mind at ease, you can confirm this with a family law solicitor - use their free surgery time / free first 15mins or something like that, which most family law solicitors have in place to attract new customers.

Fantastic advice and info! Thank you and I wish you the best with your situation

@MyPersona

Ah ha!! you are the type of people that I've heard about on these chats - the unkind ones who are judgemental rather than supportive. So just another LOL and !!!!! to make your day!! Mwah

Well if you think having a poor credit history including 2 defaults is a laughing matter OP good luck to you. Personally I think it’s very hard to understand how someone in a strong marriage to someone with the ability to buy near London without selling the existing home could get into that kind of trouble.

Believe it, it happened!

@SeaToSki

The only thing I would be worried about is that if he decided to make a change to the mortgage behind your back (extend/change the terms or borrow more) he wouldnt have to let you know as your signature wouldnt be needed. So I think its really a trust issue, do you trust his financial decisions?

Thank you. As much as I very much doubt he would do this, I've looked into it and I can make an application as an interested party with the Land Registry, therefore this couldn't happen without my permission

@Newfornow

How did you get bad credit ? Lack of money or lateness ??

Lateness

@Collaborate

I'm a divorce lawyer and often post in Legal.

Doesn't matter whose name it is in if you get divorced. I'd go for it and add your name later.

The only situation in which I'd hesitate would be if your husband is self-employed and vulnerable to insolvency.

Thank you

@Phrowzunn

Our deeds and mortgage are in my husband’s name only as he was able to borrow more/easier without me on the application. I don’t have bad credit or anything I just didn’t earn very much and now am a SAHM. As we are married it legally makes no difference, if we were to split up or anything I’m entitled to 50% and he can’t legally do anything regarding the house without my say-so/signature. As a PP suggested, marriage is about trust, it wouldn’t have crossed my mind not to do this if it meant bigger/better house, getting to move sooner etc. But, you do say that there have been trust issues in the past so only you know if you are comfortable being in this position.

Thank you. I agree with you. As much as there have been previous trust issues financially he has always been kind and supportive. It's just that I've see many men turn into monsters during horrible divorces and I just want to protect myself as much as possible in the case that anything were to happen which is the sensible way to think.

[quote FlamedToACrisp]@LemonTT

No need for exclamation marks.

What - none??????!!!!!!!![/quote]
Lol