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Clare
Clare, Solicitor
Category: Law
Satisfied Customers: 34234
Experience:  I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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My Grandson bought a flat with his girlfriend January 2013.

Customer Question

My Grandson bought a flat with his girlfriend January 2013. My wife and I provided the deposit and paid the solicitors by way of a loan. They had a child in November 2013 and the girlfriend has subsequently ended the relationship and moved back with her Mother. Everything at the moment is totally amicable. My Grandson needs to get the mortgage in his name but his income will not be sufficient. A Transfer of Equity therefore seems unlikely and a Declaration of Trust could work against him if the relationship developed badly. At present, his ex-girlfriend just wants a deposit for a rented flat as her accommodation currently is somewhat cramped. There is a £3300 plus penalty on early repayment of the mortgage if the flat is sold and this terminates at the end of January 2015.
Any suggestions/solutions please?
Submitted: 3 years ago.
Category: Law
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you for your question and welcome.

My name is ***** ***** I will assist you.

Selling it before Jan 2015 is clearly not an option unless you are prepared to pay £3,300.

What is your assumed responsibility towards the girlfriend? Do you want to pay her rental deposit?

Kind regards

AJ
Customer: replied 3 years ago.

Dear AJ, My Grandson has offered her £2500 by way of paying her off, explaining that with what little they have paid off, plus owing us the deposit and solicitors fees, etc. they will have made very little profit on the property in their time there. She appears more than willing to accept this and abrogate her responsibilities to the servicing of the mortgage. In fact, if he could take it on himself she would be happy to walk away with this sum.


Hope that helps to clarify the situation?
Kind regards,


Bob

Expert:  Alex J. replied 3 years ago.
Hi

Thank you.

The problem is she can sign over her beneficial interest in the property. However it is unlikely the mortgage company will release her from liability from be mortgage.

Have you considered renting the property out on a 6 month tenancy for example and then selling it when the mortgage deal expires? Interest rates are likely to go up fairly soon anyway and therefore remortgaging maybe an unattractive prospect?

I loll forward to hearing from you.

Kind regards

AJ
Customer: replied 3 years ago.

Hi, We could look in to renting, but permission would be needed from the mortgage company. I am not sure if they would fall in line with this suggestion. It still doesn't remove her from the mortgage which is the main aim.


We were looking to get a chum to replace her on the mortgage? He has the income requirements, etc. but we still need her off without hassle.


I made two suggestions in my first contact with you, seeking either your confirmation either would work, or coming up with an alternative I hadn't thought of, which could be a goer?


I really need the wherewith all to get her removed from the mortgage or any interest in the property removed. He can service the mortgage, but on a tight budget, but the mortgage company won't allow it under current mortgage restrictions.


Regards,


Bob

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

The only alternative I can offer, is if you either replace the girlfriend on the mortgage or offer the mortgage company a personal guarantee?

Are you prepared to commit any further to this?

Kind regards

AJ
Customer: replied 3 years ago.

Hi, You appear to be telling me what I have already told you. I have mentioned the two vehicles I know of to remove her from the mortgage or at least her interest, although neither appear to me to be a watertight solution.


Naturally we are prepared to commit but our ages are against us and his parents can't.


I have to go out till about 1200hrs. Please read carefully what I have written to date and then come back with a considered plan of action.


Kind regards,


Bob

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

I am very sorry but I do not think I can offer you any certain solution.

Anything you do, other just transferring the beneficial interest, will require the mortgage company's consent.

Essentially if you are going to change the names of the people on the mortgage, then the mortgage company will just view that as a new application for a mortgage.

I will opt out to see if anyone else can assist you.

Kind regards

AJ
Customer: replied 3 years ago.

I am sorry but you appear to have little by way of additional information/guidance than I had managed to find on the Internet. When you say you will "opt out" are you saying that you will check within your firm for someone with a greater in depth knowledge of my problem or just walking away?


I appreciate there are likely to be very few options but a steer as towards the one which will provide the best outcome would have been helpful. Also, any likely pitfalls in pursuing such a course so that I could be fore armed!!


Regards


Bob

Expert:  Clare replied 3 years ago.
Hi
Thank you for your question.
My name is Clare
I will do my best to help you but I need some further information first.
How much is the property worth and how much is outstanding on the mortgage.
Why do you think that a Declaration of Trust would not be suitable?
Clare
Customer: replied 3 years ago.

Good Morning, Thanks for taking over from Alex. The property is worth about £140K (A flat). The outstanding mortgage is approximately £111K bought when the property was valued at £125K


My concerns around a Declaration of Trust is that if his girlfriend does decide to pursue additional funds from any subsequent sale, despite his maintaining solid voluntary payments for the child, £130 a month AND having the child 1 - 2 nights a week, the Judge could still find in her favour and award her additional funds from the sale?


Everything is amicable at present and I might be worrying unnecessarily but life has a habit of biting you on the bum when you least expect it and I wouldn't want his financial sacrifice over the next 7 months (till the redemption fee is removed) to be in vain.


Regards

Expert:  Clare replied 3 years ago.
Hi
Just to check - they have never married?
Clare
Customer: replied 3 years ago.

Hi, No. They have lived with my wife and I for approximately 10 months then as joint signatories on the mortgage for this last 17 months.


Regards,


Bob

Expert:  Clare replied 3 years ago.
Hi
How was the original deposit funded and how much has his ex asked for?
Clare
Customer: replied 3 years ago.

Hi, We gave him the deposit which he used to buy the flat. She, in all fairness, has only asked for a deposit on her own rented flat nearby. This is approximately £1200 - 1500 but he wants to give her £2500 and whatever furniture she wants from the flat. Neither seem inclined to try and stitch the other up (certainly at the moment) and hopefully this attitude will continue?


Regards,


Bob

Expert:  Clare replied 3 years ago.
Hi
That is excellent news - both for now and in terms of the their future parenting of the child!
In fact the Declaration of Trust route is the best way forward at this stage - and WILL give your grandson complete protection - there is no risk of it being overturned in the future
The only potential problem would be that his ex will be advised to have a long stop date built in by which time either she is released from the mortgage or the house is sold
My only concern is that in fact the amount he is offering may be on the low side.
From what you have said if the house was sold tomorrow the equity would be £25,000 or so - and even allowing for the £15,000 repayable to you that still leaves a profit of £10,000 to be divided between them
I hope this is of assistance - please ask if you need further details
Clare
Clare, Solicitor
Category: Law
Satisfied Customers: 34234
Experience: I have been a solicitor in High Street Practice since 1985 with a wide general experience.
Clare and other Law Specialists are ready to help you
Customer: replied 3 years ago.

Dear Clare, Many thanks for your advice and guidance. I feel certain that we will be able to proceed with greater confidence than we had a couple of days ago.


Enjoy the rest of your week-end and the fine weather.


Warmest regards,


Bob

Expert:  Clare replied 3 years ago.
Hi Bob
You are most welcome _ i hope all goes well
Clare