Issues arising from Joint Mortgage with ex and new spouses

M

McStuffins

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Hi all
House purchased in 2004 (not married, no dependents). Split in 2008. House was in negative equity. Both of us left the area and rented out the house. The rent covered most of the mortgage. We made a few attempts to have the mortgage taken over by one party but the bank turned us down.
Both of us have since married other people and I now have one dependent.

Both myself and ex are on good incomes but our respective spouses are not so I don't think either of us will be approved for the full amount by the bank with our spouses. House is most likely out of negative equity but from brief communications in the last few years, we both see the house as an investment and as the rent covers the mortgage neither of us are in a rush to sell.

I feel that as circumstances have now changed and we both have a spouse I might be missing something. If one of us were to die for example, I assume their half of the property would then be the deceased spouse's property? But with the life insurance tied to the property, only myself and my ex are listed as benefactors.
I want to make sure there is nothing I'm missing protecting myself and my spouse and child from.

All advice welcome
 
"If one of us were to die for example, I assume their half of the property would then be the deceased spouse's property? "

Not necessarily.

If you hold as Joint Tenants, the deceased's interest will pass to the surviving owner. Otherwise, the deceased's interest will pass into their estate.

"But with the life insurance tied to the property, only myself and my ex are listed as benefactors. "

The life cover will pay off the mortgage.

Make some more enquiries and take some legal advice on the consequences of either owner dying - what would happen? Who would inherit? Will the mortgage be paid off?

mf
 
Who's paying the life cover ? Can you check it still is being paid if it's not you ?
 
1) While you and your ex get on well now, you might not always do
2) This would argue for simplifying matters and selling the property
3) For example, if one of you has a change of financial circumstances and stops making repayments - the other's credit record will be damaged.
4) But if you have a cheap tracker, it's likely that it's a very profitable investment which would argue for keeping it.
5) Unless one of you has a terminal illness, you shouldn't worry too much about what happens if one of you dies while you still own the property
6) If the lender knows that the house is let, then they might charge a higher rate - but usually they don't.
7) Do each of you now own your own houses? If not, the existence of a mortgage could limit how much you can borrow.

Brendan
 
The insurance is being paid from a joint account we have where the rent for the property goes in and the costs, mortgage etc go out. We keep a minimum balance and if it goes below that we get a notification and each top up by half the shortfall.

in response to Brendan
1) We had a very bad breakup and don't speak but just get on with it with minimum communication
2) I think that once the equity in the house will cover the costs of selling the house, I will push to sell however I don't particularly want to be out of pocket due to selling
3) I see your point. To date we've been lucky in that we're both in permanent jobs which were not affected by the recession
4)The tracker is the main reason we keep going with the house as is. There was massive negative equity when we split and we just couldn't afford to sell but now we're at a place where it's becoming more practical to consider it
5) Fair point - we're both still relatively young
6) Lender knows it's rented out but hasn't sought to change the basis of the mortgage
7) Neither of us own any other property for that very reason. We (me and my spouse) can't get another mortgage based on the fact that I have a large mortgage. We are lucky in that his family own property and we are renting from his parents at minimal rent (they didn't want us paying rent at all) while trying to save a deposit but there isn't really any hurry on us. He's an only child with wealthy parents so we could probably stay here as long as we wanted. I'm also considering whether we should buy out my ex as we can relocate there easily enough.
 
McStuffins - who pays the tax on the rental income and pays the accountant to do the annual tax return?
When you say life assurance I assume it's mortgage protection?
AFAIK - if you die, the mortgage protection will pay off the mortgage and your ex boyfriend will fully own the house.
If he dies the mortgage protection will pay off the mortgage and you will fully own the house.
 
Lucuma said:
AFAIK - if you die, the mortgage protection will pay off the mortgage and your ex boyfriend will fully own the house.
If he dies the mortgage protection will pay o
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Not necessarily. Treatment on death of 1 party depends on whether the house is owned as joint tenants or tenants in common. This is something that should have been considered when they bought house as they weren't married.
 
I was never able to figure out if my own mortgage with my ex was joint tenants or tenants in common. It's not written on the mortgage approval letter or the Land registry deeds? There must be a default normal one that banks put you as? What's preferable for the bank?
 
McStuffins said:
1) We had a very bad breakup and don't speak but just get on with it with minimum communication
Click to expand...

Then you should definitely try to resolve it and cut your ties with each other.

That would take precedence over the financial aspects of it.

Which lender are you with?

They may allow each of you to move half the tracker to a new property but charge you an additional 1%.

Brendan
 
Lucuma said:
There must be a default normal one that banks put you as? What's preferable for the bank
Click to expand...
Nothing to do with bank really, this is something your solicitor would have dealt with.
The bank just wants to make sure that anyone with a legal interest in the property is liable for the mortgage.
 
Lucuma said:
I was never able to figure out if my own mortgage with my ex was joint tenants or tenants in common. It's not written on the mortgage approval letter or the Land registry deeds? There must be a default normal one that banks put you as? What's preferable for the bank?
Click to expand...

Essentially, the purchase of the property and the mortgage of the property are two separate transactions.

The mortgage documentation won't distinguish how the property is held - so long as it's in both names.

You can obtain a copy of all the paperwork from the Land Registry for the transaction - its called the Dealing or Instrument.

If there is no reference on the folio to joint tenancy or tenants in common, it will, more than likely, be held as joint tenants- if it was a tenants in common, there would be a reference on the folio to the shares held by each owner.

If the title is unregistered ( as in, there is no folio just a deed into the two names) - then there will, you'd hope, be a part of the deed referencing how the property was to be held.

mf
 
mf1 said:
Essentially, the purchase of the property and the mortgage of the property are two separate transactions.

The mortgage documentation won't distinguish how the property is held - so long as it's in both names.

You can obtain a copy of all the paperwork from the Land Registry for the transaction - its called the Dealing or Instrument.

If there is no reference on the folio to joint tenancy or tenants in common, it will, more than likely, be held as joint tenants- if it was a tenants in common, there would be a reference on the folio to the shares held by each owner.

If the title is unregistered ( as in, there is no folio just a deed into the two names) - then there will, you'd hope, be a part of the deed referencing how the property was to be held.

mf
Click to expand...
Great explanation
 
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