Can I Split our Current Mortgage?

Posted on 11 November 2011 by Jay


I am going through a separation with my ex. We bought a flat together, the mortgage is in both of our names. Is it possible to split the mortgage, sell the property and find a new one with my half of the existing mortgage? I'm earning nearly double as what i was on when the original mortgage was approved, so could afford a much higher repayment also. The only issue would be if i couldn't split the mortgage, increase the amount borrowed and move to a new property. Have no savings set aside for a deposit.

Jay

As soon as you sell the flat your existing mortgage will have to be repaid.  Depending on the terms of that mortgage it may then be possible to move or "port" the existing product on to a new mortgage with the same lender.  Your original mortgage offer should contain details of whether or not this is possible, but if you can not find this then your lender will know.

The main reasons for porting an existing mortgage are to keep the benefit of an interest rate that is lower than the rates available now or to avoid the payment of early repayment charges.  With the latter you usually have to borrow at least the same amount or more than your existing mortgage.  If you borrow less you are likely to have to pay an early repayment charge calculated on the difference.

I have never heard of a lender agreeing to both parties of a mortgage porting their current product to two new separate mortgages and I think that if this is what you want to do, you will have the lender scratching their heads before finally working out that their computer systems will not allow them to do it.

I note that you have no savings for a deposit and this could present more of a problem than anything if there are going to be no proceeds from the sale of your flat?  Hopefully half of the equity, after all costs have been paid, will give you enough to put down on a new property and the increase in your earnings will enable you to borrow sufficient funds to cover the balance.

I recommend that you speak to your existing lender to find out if your current mortgage is portable and then whether or not they are willing to increase your borrowing to cover a new purchase.

Peter

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