My wife and I have made an offer on a house which we want to buy equally. My wife will take out a mortgage while I will pay for half the value in cash. My solicitor has said I cannot be mentioned on the Deeds because of my credit history and I don’t work. How can I protect my cash interest in the property?
This raises a couple of awkward issues. The property must be registered in the name of the person in whose name the mortgage is taken out. If the Lender will not consider you as a joint Borrower then the property must be vested in your wife’s sole name. Usually these situations can be protected by recording the extent of your contribution towards the purchase price in a Declaration of Trust entered into between yourself and your wife.
However, in principle, this Declaration of Trust would prejudice the interest of the Lender as it would be an acknowledgement on your wife’s part that she did not actually provide all the funds, over and above the mortgage advance, towards the purchase price. It will also represent an acknowledgment on her part that you have an interest in the property in view of your financial investment.
A second problem is that the easiest way of securing your investment in the property by taking a second charge over the property will more than likely be prevented by the Restriction contained in your wife’s mortgage preventing the registration of subsequent mortgages without the consent of the first mortgagee. While the first mortgagee will have priority over any interest secured by the second charge, mortgagees are increasingly reluctant to consent to any subsequent charges being registered against properties.
Ultimately, therefore, a Declaration of Trust, or Second Charge, while advisable, may not be possible. However, an equitable charge or, at the very least, some documentary evidence acknowledging your contribution towards the initial purchase price, would be advisable to ensure that at least documentary evidence of your financial input does exist.