Welcome to our latest blog post! In this article, we will be exploring the question: Can a name be removed from a mortgage without refinancing? It’s an important question to ask if you’re considering splitting from a partner, or simply want to reduce your financial liability on a property. We’ll explore the various options available to help you decide what’s best for you.
Firstly lets clarify that we are referring to the loan you have with the bank, this is commonly referred to as the mortgage and used interchangably. Removing someone form the Loan or the mortgage is different to removing their name from the title or ownership of the property.
What Are The Reasons to Remove a Name From a Mortgage?
Removing a name from a mortgage is a decision that should not be taken lightly. There are a few different reasons why one might choose to do so, and it’s important to understand all of the implications before making this decision.
One of the common reasons for wanting to remove a name from a mortgage is that you have separated from your partner and you want to take over the loan in your name only.
Another reason to remove a name from a mortgage is that the co-borrower may need to borrow for another property and do not have the borrowing power to do both.
The Final reason could be that your partner has passed away or you have separated form them.
When considering whether to remove a name from a mortgage, it’s important to understand the potential implications. Depending on the situation, removing a name from a mortgage may require refinancing and/or getting legal advice. It’s also important to consider the potential impact on the credit score of the remaining borrower.
Overall, removing a name from a mortgage can be a complex decision with a number of potential implications. It’s important to carefully consider all of the potential implications before making this decision. If you have any questions or concerns, it’s best to seek the advice of a professional with experience in this area.
How Can a Name Be Removed From a Mortgage Without Refinancing?
In Australia, it is ONLY possible to remove a name from a mortgage without refinancing, if the other person has passed away. This process normally involves completing what is called a “partial discharge” and providing the death certificate.
If you would like to remove your partner for any other reason the bank will need to assess your aplication as an an individual to make sure you fit their specific requirements for a a loan. As every bank has different policies it is important to talk to a broker to understand your options.
It may not mean “refinancing” to a new bank, but rather “restructuring” your existing loan with your existing bank.
When your partner remains on the title of the home they would still need to consent to the new mortgage as they are a part owner of the property. This would mean they become a guaranto or on your loan. you are the borrower but they are the gurarantor. it means they have approved to you borrowing and using the property as security for the loan.
This is a common structure we have used many times when for example, you buy a property with family and one person has a cash deposit and the other needs a loan.
What Are the Benefits of Removing a Name From a Mortgage?
But how do I remove somebody from the title of the property?
Just to be clear when you removing a name from a mortgage – this means taking them off the loan with the bank
If you are removing them off the title of the property so that they no loanger own the property this will require legal advice.
It is most common to remove a name of the title of the property when you go a divorce or separation. In this case you need to go through a legal process and agree who gets the property and what does the other person get? You need legal advice and you will need to go through a”Financial Settlement” process. If you both agree, this is not a costly process but does require a rubber stamp from the Family court so that the property can be transfered No Stamp Duty is Payable if you follow this process.
If however you wanted to buy the other person out of the property then you would need to pay stamp duty. Say for example you purchased a home with your sister and lived there together but now she wants to buy her own home and wants you to buy her out. you do need legal advice here, but esentially you are buying half a peoperty and would paty stamp duty on half the value of the home at that time.
– In this case you MUST refinance the loan into your mane and will probably need to increase the loan to cover the cost of buying out your sister.
Before you agree with this please talk to one of our team to understand your individual borrowing power and see what is possible.
Need a hand? We’re here to help
At Home Loan Partners, we understand that life changes and that refinancing might not always be the best option. We are here to help you navigate the process of removing a name from a mortgage. We are here to answer any questions you may have and to help guide you through the process.
If you need assistance with removing a name from a mortgage or have any questions, don’t hesitate to get in touch with us. Home Loan Partners would love to help you and make sure you get the best possible outcome