Information on Joint Mortgage Negative Equity

Pin It

There are instances where a mortgage is jointly purchased by two people such that the property is under their names. This is particularly common in marriages, relationships, partnerships and even general friendships where two or more individuals come together and decide to join effort to enable them get a property that a single individual would probably not afford. This is referred to as a joint mortgage and it’s not uncommon to find several couples taking this option. Due to the changing economic conditions which affect market rates, it is possible that the jointly held property can get into negative equity. This raises a complex situation when it comes to determining who should take responsibility and be held liable for amending things. It becomes worse when the negative equity sets in at a time when the joint is not firm enough and so there are pending issues like divorce and separation. However difficult the situation can get, the sad reality is that the negative equity has to be dealt with and all dues owed to the lender must be paid. A few options would help deal with such situations involving a joint mortgage, negative equity.

Refer to the Agreement
It is in such situations that the agreement signed at the onset of the mortgage becomes crucial and you will have to refer to it. Since you took the mortgage as a joint arrangement, it must have been reflected in the agreement alongside accompanying terms and conditions of the joint mortgage. In most cases, the agreement should specify that the joint holders of the mortgage are fully responsible for all repayments until the total sum of the mortgage is totally cleared. If this specification was clearly indicated in the agreement, then it becomes obvious that every party will be expected to attend to the negative equity. This may proof non-viable as an option if your joint engagement was not put into any legal structure and all you did is discuss about it; so the mortgage was registered under one name. This is common in circumstances where the involved individuals trust and believe in one another so much that they cannot imagine any issues in the future. In such a case, the option of referring to the legal agreement will not help that much.

Contact the bank or lending entity
The lender will most likely give you the most appropriate direction to take in case of joint mortgage negative equity. You can also find out if it is possible to buy one party out such that only one individual is left to settle the mortgage.

Leave a Reply