Hi all, me again...

The value of our house is currently approx £175,000 and the remaining mortgage is approx £100,000 therefore leaving equity of £70000, my share would obviously be half. I'm thinking a trust deed may not be the way to go as we could probably remortgage and pay off a large chunk of the debt.

What also worries me is that our current deal has only 18 months to run and if I entered a trust deed would we be able to enter a new deal with my credit rating being gone. If I was to enter a trust deed and be paying it over 5 or 6 years to cover some of the equity... could my wife take on the mortgage herself in 18 months time so she can still get a good deal? I'm really worried that my credit rating will affect her and stop her getting credit even though she has nothing to do with my debts.

Sorry for more questions, just feeling really down about all of this and struggling to see any way out which doesn't affect my wife and kids.

Good morning arab6767.

Once in a trust deed it would be very difficult (probably impossible) to move your joint mortgage to a new lender.

Many mortgage providers do offer their customers replacement products when their existing deal expires though. Credit ratings are much less of a factor here because the existing lender isn't taking on any additional risk.

So long as your full mortgage term (often 25 years for example) hasn't expired your existing mortgage product would transfer to the lenders standard variable rate if there were no replacement products available. Right now they're typically fairly low, though of course there is no guarantee that they will not increase at some point in the future.

Your wife could potentially take out a new mortgage in her own name in the future. She'd need to be able to demonstrate that her income alone was sufficient for the new mortgage to be affordable. I don't think your income would be taken into account.

I hope this information is useful, even if perhaps it isn't what you might have been hoping to hear.

If your valuation is correct then the equity may be too much to make a Trust Deed work, as you suspect.

In terms of the mortgage. Presumably you would revert to the standard variable rate when your deal ends, which might not necessarily be that different from the deal you are on currently. In any case, if you are simply looking to get onto a new fixed rate with your current mortgage provider then your credit rating might not be a factor. It's not as though you are borrowing any more funds or remortgaging with another lender instead.

Maybe another forum member will be able to share their experiences in this regard...

Hi TDA, no that's ok.

Our current mortgage deal is with Virgin so maybe they could offer a new deal or as you say the variable rate probably isn;t much higher than our current rate.

However if I entered a trust deed in say November 2016 and it could be arranged over 5 or 6 years to include payments towards my share of the equity.... could my wife take the mortgage into her own name in 18 months when our current deal, or does my name still have to be on the mortgage as I have equity in the home also.

Not trying to be dodgy here in any way. Just thinking of ways to stop my wife missing out on getting credit due to my stupidity. For example if I am in a trust deed, would she not struggle to get credit for a new car if my name is still on the mortgage?

Hi Kevin, thanks for your reply.

To be honest looking at all the options I'm thinking a debt repayment plan may be a better option.
Personally I feel like it was me that got myself into these debts and I should pay them back, however the interest is what is killing me at the moment. With a debt repayment plan is the interest frozen until the debts are paid off. I guess this will have the same effect on my credit rating though and take even longer to pay off.

Hi arab6767.

If you enter a formal Debt Arrangement Scheme, and your creditors support you, you're guaranteed that no further interest or charges will apply provided that you maintain your side of the bargain. You, and your house, will also be protected from creditor legal recovery action.

There's more about DAS here: https://www.trust-deed.co.uk/debt-arrangement-scheme.html

If you enter an informal debt management plan, you may find that your creditors agree to freeze interest. While this often happens, some may choose not to, some may choose to reduce the interest, some might take a while to freeze the interest, and you'll have no formal protection from creditor legal recovery action. Debt management plans work very well for a lot of people, but DAS gives you a lot more certainty and protection.

You're correct that DAS will affect your credit rating. Probably less so than a trust deed, but perhaps for a longer period depending upon how long your DAS would be expected to last.

Your wife could only take the mortgage into her own name if a lender agreed to do that. Your current lender would lose some security on the loan if you came off the mortgage, so perhaps they have little reason to agree to this. A new lender would have to believe that the mortgage was affordable based upon your wife's income alone I'd imagine.

Because you have a joint mortgage (the same applies with a joint bank account) there will be a link between your credit files. Just because your credit rating declines, your wife's will not as a result. However, if she makes an application for credit, the lender might follow the link to you. This might make some lenders less willing to lend because both of your financial affairs are obviously closely connected and because you'd experienced difficulty managing your existing contractual repayments.

Hi TDA,

OK thanks for that. The main thing I'm really asking is that if I entered into a DAS or a trust deed, then in 18 months when our current mortgage deal ends, could the mortgage be changed into my wife's name only? Even when I still have equity in the house and would be mid trust deed.

Just thinking of all possibilities. Probably best to speak to David or Kevin I know.

Hi again arab6767.

I think by mistake you've mentioned DAS and trust deeds in your last post.

In DAS you could transfer an asset to your wife. DAS doesn't incorporate assets. During a trust deed you could not without your trustee's consent. They'd have no reason to provide this consent as it would probably run contrary to the interests of your creditors.

Owning a house and being named on a mortgage are two different things, as you may well already be fully aware. You can own a house (or part of a house) without being named on the mortgage.

In terms of transferring a mortgage into your wife's name only (rather than your equity), I think the following from my last post covers it. There may be some real practical challenges:

"Your wife could only take the mortgage into her own name if a lender agreed to do that. Your current lender would lose some security on the loan if you came off the mortgage, so perhaps they have little reason to agree to this. A new lender would have to believe that the mortgage was affordable based upon your wife's income alone I'd imagine."

Thanks very much for your patience and answering my queries.

I think it is very unlikely that you would be able to transfer the mortgage into your wife's sole name but still be joint owner of the property.

It might be possible for your wife to get a mortgage in her own name alone and take the house into her sole name, but only if she can satisfy the mortgage lender that she can afford it. This option would probably only be compatible with a Trust Deed if she was borrowing more on the mortgage and paying a lump sum to your Trustee to buy out your share of the equity.

I hope that makes sense!

Thanks Kevin, yes that makes sense.

The more I think about it I don't think a trust deed would work for me.
I'm accepting that I made the debt so I'll pay it back.

I worry that our mortgage lender wouldn't let us add say £40,000 to our mortgage to pay off
A large chunk of the debt due to the size of my debt. Although saying that, I've never missed a credit card
Payment and we've never missed a mortgage payment before. Between us we earn £65k. Any ideas?

Might be worth speaking with a mortgage broker and your own mortgage lender arab6767.

You'd obviously need to be very sure that any new mortgage(s) payment is/are totally affordable to avoid putting your home at risk. Some possibilities might be:

1 - Your existing lender increases your borrowing now.

2 - You move to a new lender now, with an increased mortgage. You might have to pay early exit fees from your current lender.

3 - You take out a secured loan now, on top of your mortgage. You could then try to consolidate this secured loan and your existing mortgage into a single new mortgage when your current deal expires in 18 months. Or, you could carry on with a separate mortgage and secured loan at that point in time.

This isn't advice to you though, just some options that a mortgage broker might help you to consider and investigate.

Hi guys,
Just reading through my post and answers as still battling away trying to pay minimum payments.

I'm really worried about what is going to happen as I'm gonna guess that my wife won't accept adding my debts onto mortgage, and I think the equity in our house will be too large to qualify for a trust deed. Therefore it would probably end up we would have to sell the house. Can't believe I've been such an idiot! My wife and kids deserve better and I don't know where to turn to, I'm not sleeping and generally feel sick with worry all the time.

Even if my wife was to stand by me why would a mortgage lender approve a remortgage when I have almost £60k of credit card debt! And if I was to enter a trust deed I'm worried how much of the equity my creditors would want that would allow me and my family to keep the house.

Hi arab6767.

The main reason a mortgage lender would consider lending money to help you repay your debts is that it's good business, for them.

If they think that you're a good credit risk, that your property is good security, and that your new mortgage will be affordable for you, then it's good business for them.

If it was confirmed that there's jointly £75,000 of equity in your home, it does seem quite unlikely that a trust deed is going to be right for you in this instance. Is there anyone in your wider family who could step in to buy your share of the equity from a trustee?

Hi TDA, yes there is definitely around £75k equity.

So worst case scenario is I will be entitled to £35k or so in equity from house which will go a long way to paying off my debts and then work on paying them off ASAP. I have 6 credit cards and if I could clear 3 or 4 of them then they usually start offering interest free deals to switch so could make use of that. Pay them off as soon as possible and make a new start debt free.

However I'm praying that my wife is understanding and we can do something with remortgaging. I've figured the best way now is to stop worrying about it so much and do something about it. Worrying isn't paying the debts and is probably seriously affecting my health.