Question - car loan - jointly owned house as security

[roxy]

Hi everyone, this is a question for a mortgage law assignment that is due this week.

A husband and wife jointly own a house (no mortgage)
The husband wishes to borrow $70,000 to buy a sports car and use the house as security.
Does the wife need to be included in the loan agreement between the husband and the bank? How? and why?

If anyone could help me, it would be greatly appreciated. Cheers

 

[VYBerlinaV8]

If the house is being used as security then the purpose of the loan (ie the car) is irrelevant from a loan security perspective.

It would be a straight property loan extension, assuming sufficient equity and servicing ability existed.

I did something similar this year, but bought a Hyundai rather than a sports car.

 

[roxy]

Thanks. I think the answer is that the loan needs to be in joint names (both husband & wife) OR that if the loan is in the husbands name only, the wife has to be guarantor (as the property is held in joint names)

I have been studying all weekend and my brain is going to mush

 

[Corey Batt]

Thanks. I think the answer is that the loan needs to be in joint names (both husband & wife) OR that if the loan is in the husbands name only, the wife has to be guarantor (as the property is held in joint names)

I have been studying all weekend and my brain is going to mush

Mortgage law? What degree/course?

Try not to fall asleep.

 

[Terry_w]

Hi everyone, this is a question for a mortgage law assignment that is due this week.

A husband and wife jointly own a house (no mortgage)
The husband wishes to borrow $70,000 to buy a sports car and use the house as security.
Does the wife need to be included in the loan agreement between the husband and the bank? How? and why?

If anyone could help me, it would be greatly appreciated. Cheers

The answer is, as always "It depends"!

Depends on the lender. There is no reason for the wife to be included in the loan.

But it will also depend on the security. Is the bank taking a registered mortgage? If so as an owner of the property she will either need to:
1. be on the loan
2. guarantee the loan.

If the bank is taking an unregistered mortgage then perhaps it wouldn't need to (but banks don't take unregistered mortgages).

It may also depend on if the land is held as joint tenants or tenannts in common. A tenant in common may 'devise' his/her share. I am not sure but this could possiblly include mortgage.

 

[Terry_w]

Just checked Peter Butt, Land Law, 6th edition, p245.

One co-owner (whether joint tenant or tenant in common) may grant a mortgage over his or her share

 

[Paul@PFI]

Hi everyone, this is a question for a mortgage law assignment that is due this week.

A husband and wife jointly own a house (no mortgage)
The husband wishes to borrow $70,000 to buy a sports car and use the house as security.
Does the wife need to be included in the loan agreement between the husband and the bank? How? and why?

If anyone could help me, it would be greatly appreciated. Cheers

If I was advising the BANK I would be advising that wife needs to consent to the loan. If I were the BROKER I would do whatever keeps the bank happy. If I were the HUSBAND I wouldnt tell my wife.

 

[Terry_w]

If I was advising the bank I would advise to get more security than needed.

If I was advising the borrower I would advise to give as little security as possible - unsecured if they would accept it.

 

[Peter_Tersteeg]

You've stated the couple owns the house jointly, it's fair to assume they're both on the title.

The wife's consent will be required to increase the mortgage. I imagine there's a legal requirement somewhere in all this.

I can't think of a lender that won't want the wife on a mortgage application in some form (as an applicant or guarantor).