The best approach with this scenario is to be honest with your mortgage lender. Most lenders will be sympathetic to your situation. Some lenders may let you take a payment holiday whilst you are sorting out your finances. Before excepting this offer though, you should check that by doing so, your credit score will not be impacted upon negatively, as this could affect your ability to secure credit in the future. When you are faced with this situation you have a couple of options open to you:
- Sell the property and use the funds to pay the mortgage off. There may be a redemption penalty to pay for settling the mortgage early that will need to be factored in, but hopefully you will be able to use any equity to secure your next property.
- You can discuss with your lender the possibility of taking the mortgage on yourself. This will involve you “buying out” the other mortgage holder, paying them their share of the equity. This will result in your loan increasing and therefore so would your monthly payments (unless the lender is able to stretch the term of your mortgage to reduce them). The lender will check that you can afford the repayments on your own, unfortunately if they do not feel you are able to make the required payments, they will not transfer the mortgage into your name. Also need to bear in mind, that you will need to pay for a valuation on your property and legal fees to put the property in your name.
- You could continue to pay the mortgage as it is, if this works for your circumstances. This would mean that both names would remain on the mortgage and therefore both would be responsible for ensuring the monthly payments were met. If for any reasons the payments were not met, this would have an effect on both of your credit ratings.
Whatever you decide is the right choice for you, it’s important to get good impartial advice. You could talk to Citizens Advice or a solicitor to be clear on your options and liabilities.
Please note the content of this blog is for guidance purposes only and does not constitute for professional advice. Contact us today at email@example.com or by calling 01473 216950.