A reader writes: My wife and her sister bought a house when they were in their early twenties and still have a mortgage of €150,000 on it. They both lived in the house and paid the mortgage, until my wife and I married in 2008 and she moved into my home with me. My sister-in-law lived in the house for a while, but neither she nor my wife has paid the mortgage for the past six years. They had a falling out and, to keep the peace, their father has been meeting payments. I would like to extend our home now and need to remortgage. My sister-in-law refuses to talk about the house. What can we do?
There are three issues at play here: in order to remortgage your house you will need to get your wife’s name on the mortgage; for you to get your wife’s name on the mortgage you will need to prove to the bank that she is a good financial prospect; and, to prove that, your wife will most likely need to get her name off that other mortgage.
Banks insist that a non-owning spouse of a property must have their name on any future mortgages. By law, under the Family Home Protection Act, the non-owning spouse has an automatic veto over mortgaging or selling a family home. Because of this veto, the banks will insist on the non-owning spouse becoming party to the mortgage.
That opens up another problem for you: in order for your wife to come onto your mortgage, she will have to pass credit checks. This is unlikely to happen, because her name is on the other mortgage. She will have to get her name off the mortgage of the house she bought with her sister.
The saving grace here is that the mortgage on your wife’s house is being paid and there are no arrears on it. That means the house isn’t likely to be repossessed.
Advertisement
Provided there is no negative equity on your wife’s property, she should remove her name from the other mortgage. She can do this by waiving her right to ownership of the property. If her sister qualifies for a mortgage on her own, there should be no problem.
However, if your sister-in-law cannot pay the mortgage on her own and will not agree to sell, your wife can seek an order from the court for sale. Under the Conveyancing Act, if there is a dispute between co-owners they can be forced to sell with permission of the court. The mortgage will be paid off and the proceeds divided. Unfortunately, it’s a lot more difficult to sell the property if it is in negative equity.
Assuming the house isn’t in negative equity, you could seek the help of a qualified mortgage broker to persuade the bank that your wife is a good financial catch as she stands – with the other mortgage as an asset — and there’s no need to go through the twists and turns described above. Ultimately, what lenders want is someone who is sound financially.
The bank couldn’t care less who pays her mortgage once the obligation to it is being fulfilled, but the fact that neither your wife nor your sister-in-law have recently paid the mortgage will ultimately decide what proportion of the sale money they will get. As their father has been paying the mortgage, he will be have built up a beneficial interest, and he may be entitled to a stake in the house.
Roddy Tyrrell is principal of Tyrrell Solicitors. Check out lawyer.ie for expert advice on various areas of the law