Fred and Mary own a property jointly with a mortgage in joint names on the property.(weren't married but now seperated and kept the property jointly as an investment) Fred now wants to get a seperate equity release on the property in his name. How does Mary protect her 50% interest in the property in the case of Fred defaulting on his loan? Can Mary protect her 50% interest or does the bank hold security over 100% of the property and Mary gets less than her 50% share in the case of a default? Thanks
Fred can't borrow money against the property without Mary being a guarantor or a co-borrower and that means she is giving her 'share' as security. But if things go wrong the doctrine of exoneration may help Mary.
In such cases Mary would seek legal advice and a solicitor will generally suggest the property settlement matters rank ahead of helping the ex get any loan. Use that as leverage. If Fred defaults Mary would know the lender can pursue her alone esp if Fred doesnt have a job and Marry is well paid and in astable job. Loans are joint & several. Mary may be up for 100% of the debt not just 50%. Hence the need to exit the relationship through a property settlement. Fred may stop paying and leave Marys credit record in tatters.
