Joint Mortgages And The Risks If You Split Up


The majority of mortgages in the UK are in joint names, but it seems that old small print clauses from years gone by have not been removed. The clauses refer to the liability for payment of outstanding debts if a share of the property is used as collateral for a loan. The problem comes whereby the other party to the mortgage is unaware of the loan against the property.

A recent case in the UK revolved around a couple who acquired a property together, only to split up after a few years with a large part of the mortgage left unpaid. One of the couple remained housed in the jointly owned property, but began to cover the mortgage payment themselves. The party who left the property took out a £50,000 loan against their share of the property, although shortly afterwards the individual was declared bankrupt.

As a result of little known small print in the mortgage agreement, the party living in the house became liable for the outstanding £50,000 debt, risked losing their home and being thrown out onto the street. The case was taken to one of the highest courts in the land, where thankfully for the innocent party the small print was ruled not enforceable.

It is believed that a number of the older mortgage agreements in the UK have similar clauses. While many find it strange that one of the parties is able to use their share of the property as collateral, without having to inform the other party, it was in the agreement. Perhaps the fact that one party had been covering the total mortgage payments for some time was the major influence in over turning this particular prosecution by the UK lender.

Check you mortgage agreement small print asap, you could be next!


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