A rip-off wrecked my credit score rating: Can I put our mortgage in my spouse’s title? DAVID HOLLINGWORTH REPLIES

I bought my flat several years ago. I live with my wife and our children, but the property was purchased in my name only. 

I remortgaged about two years ago to release some equity. 

Sadly, I recently fell victim to a scammer. They persuaded me into sending them money with the promise it would be invested, and told me I could make a good return. I ended up losing everything, and ruining my credit rating. 

I feel stupid and have let my wife and the children down. 

I am still paying for the mortgage and have not defaulted on it. However, I worry that my poor credit score will prevent me remortgaging to a new fixed deal in future, and that we could end up on a high interest rate. 

Given these issues, I want to transfer the flat to my wife’s name. 

Is this something the lender would consider and what things should I be aware of?

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David Hollingworth replies: This is a stark reminder of the number of financial scams that are out there, and how easy it can be to be drawn in by their promise of growing wealth quickly. 

Too often these schemes can either be outright scams or carry extreme risks which aren’t highlighted appropriately.

Either, way you shouldn’t feel stupid and certainly won’t be the last person to be affected. 

If you have been a victim of fraud there is lots of useful information on the Action Fraud website that may help you and will underline that you’re not alone.

Lenders can allow capital to be raised by remortgaging, although they will ask what the additional funds will be used for. 

Whilst something like home improvements will be acceptable to lenders, purposes such as funding a business or investments may not be as widely accepted.

You may not have intended to push those funds into the scheme at the time but it sounds like whatever was involved soon swallowed up the cash. 

That may then have affected your credit as you chased any losses and have subsequently fallen behind on any other borrowing.

Can you keep up with mortgage repayments?  

The better news is that you have managed to keep up with the payments on the mortgage, so your payment record with the lender remains intact. 

The remortgage would have required you to demonstrate that you could afford the mortgage based on your income and outgoings which will hopefully have stood you in good stead.

Hopefully you can keep that up and manage your overall debts but if you are struggling to meet mortgage payments then it will be important to talk to your lender sooner rather than later. 

They will look at options that could help you manage the mortgage and avoid falling into greater difficulty. Remember that repossession is a last resort for the lender.

If you can keep up with the mortgage payments then you are likely to still have standard rate options available on a like for like basis from your existing lender when the current deal ends. 

Switching to a new lender would require a full affordability assessment and if your credit file has been damaged, it is likely to require a more specialist lender.

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Transferring a mortgage to your spouse 

Transferring the flat into your wife’s name would effectively see you ‘sell’ the property to her. 

You should think carefully about what you hope to achieve by doing that, as well as how you may go about it. 

Legal advice for you both would make sense, and be aware that there could potentially be a stamp duty land tax liability.

Lenders can consider lending in a sole name where the partner is resident in the property, but they may well ask why a married couple are not joint owners. 

They may also have issues with the previous owner remaining in the property, due to the rights that could come with that. 

If the reason is to avoid an impaired credit record on the mortgage then they could well decline to proceed.

If you and your wife are already financially associated, for example through a joint bank account, it will be apparent on credit searches. 

The lender may take a closer look at your credit position as part of the assessment process.

It’s possible to transfer the property at a concessionary value rather than at full market value, but your wife will presumably need to at least take on the existing mortgage. 

She would need to meet a lender’s affordability assessment based on her income and other commitments.

I think that you should focus on your overall position together with your wife, and consider how you best manage the mortgage and other debt commitments. 

Debt charities will be able to help you understand your options and how to get to grips with the situation.

That will hopefully help you both get things back on track as soon as possible, which will improve your situation in the longer run.

It should also help clarify the right approach when it comes to the property.