While your name remains on a joint mortgage, you remain jointly liable for the payments. It is also unlikely that you will be able to obtain a mortgage on another property unless you can satisfy the lender that you can afford the payments for both properties. This could result in a substantial delay in you being able to purchase a property to meet your needs.
What practical steps should I take if I am considering transferring a jointly owned property to my spouse?
It is a good idea to check with the lender in advance whether they will agree to release you from the mortgage. If it is clear that you cannot be released at that stage, it would be usual to obtain an undertaking (a legally binding promise) from your spouse that they will use their ‘best endeavours’ to procure your release from any liability under the mortgage within a certain period of time and before completion of the property transfer. It is also appropriate to seek an undertaking that they will indemnify you. Breach of an undertaking is a serious matter. It is contempt of court and is punishable by imprisonment, in extreme cases.
The use of the term ‘best endeavours’ means that your spouse is only ordered to do what is within their power and thus is not penalised for breaching an order through no fault of their own. When drafting a financial settlement, it is a good idea to set out what ‘best endeavours’ should include. For instance, it could include finding a guarantor, down paying part of the mortgage, discharging arrears that have been accumulated and/or re-mortgaging at a higher percentage rate if necessary. You may want to provide for your spouse to update you on any progress made at regular intervals.
Particularly in the current economic climate, where mortgages are more difficult to come by, you run the risk that there could be a lengthy delay in you being released from your mortgage obligations on a jointly owned property. When drafting a financial settlement, you should also consider whether provision should be made for the property to be sold, if you have not been released from the mortgage by a specific date. Alternatively, you may want to postpone the dismissal of your future financial claims against your spouse until you have been released from the mortgage, so that it is still an option for you to seek a sale of the property at a later date.
What is the position if my spouse refuses to give an undertaking to release me from a mortgage or fails to cooperate in court proceedings?
The recent case of CH v WH  EWHC 2379 [Fam] confirms that the court has the power to order a spouse to make payments and/or indemnify the other spouse against non-payment of a mortgage.