There are various reasons that lead people to apply for a joint mortgage. For example, most married couples prefer to apply for a joint mortgage for their new family home. Joint mortgages are easy to qualify when both parties meet all the necessary requirements needed to apply for a mortgage. However, sometimes things change and in the case of a marriage, a couple may decide to have a divorce which means one of the borrowers has to leave the house.
In such cases, most people ask whether it’s possible to remove a name from a mortgage without refinancing. One thing to note is that it is not easy to get your cosigner’s name off the mortgage loan but possible. Mortgage lenders in Montreal are ready to help in such situations and they help borrowers come to an agreement on how to go about with the transition smoothly. Just because one of the cosigners wants out does not mean that you automatically have to opt for refinancing. Both the primary borrower and the cosigners continue to be responsible for the loan until things get settled out.
Why removing a name may not be as easy as you think
The reason why taking off someone’s name off a joint mortgage is not easy is because of several reasons. One, you need to understand that when you apply for a joint mortgage, lenders look at all the applicants’ credit score to determine whether they are credit worthy or not. If approved, all borrowers are one hundred percent responsible for the debt meaning that if one person is unable to pay for the loan, the other party is required to pay the full amount. Lenders understand that when they remove a name from a joint mortgage, the risks go up if one party is left to pay off the mortgage.
For a married couple seeking to get a divorce, the joint mortgage applies the same until decided otherwise. In case the court rules that your ex is still responsible for the debt, that means that both of you continue to held liable for the loan. If one is unable to pay, the lender has the ability to follow up with the other partner to pay off the loan.
How to get a name removed
The process of removing a name from a joint mortgage usually takes several weeks so that means you have to be patient. You need to start by contacting your lender and let them know of your intentions. You may have to explain why you need to remove a name in the first place before proceeding to the next step. The lenders will have to find out if it is possible for you to repay the existing loan by yourself.
The lender will go through your credit score and you will be required to fill out applications forms similar to the initial ones you filled when you got the loan. In case there is more than one borrower after a name has been removed, they too have to re-qualify for the loan. Once the lender company goes through your financial information and credit score and find them satisfactory, you need to sign a mortgage novation. This is a new contract which removes someone from the mortgage loan and he has to sign a quitclaim deed which transfers the property to the remaining borrower(s).
The bottom line
It may not be an easy move to remove a name from a joint mortgage without refinancing but that does not mean it is impossible. Always talk your lenders before deciding on anything since they are able to advise you on what you need to do. It certainly helps to agree with your cosigners on the move to ensure the process goes smoothly.