Lightning Aura Components – Can’t Change Case Owner Using

I feel like there should be a better way to do this, but if you want to override the user input on a field, you can try destroying it and then re-creating it using an aura:if and then set your value. I've used this method inside a submit function with a preventdefault tag at the top with good success when I want to reset a record creation form, but please note that I haven't thoroughly tested this in an onchange situation.

To try this approach, you would want to re-work your code as follows:

Component:

<aura:component implements="flexipage:availableForAllPageTypes,forceCommunity:availableForAllPageTypes,force:lightningQuickAction,force:hasRecordId" access="global">
<aura:attribute name="recordId" type="String"/>
<aura:attribute name="renderName" type="Boolean"/>
<div class="slds-container-outer">
    <div class="slds-container">
        <lightning:recordEditForm aura:id="recordViewForm" objectApiName="Account" recordId="{!v.recordId}">
            <lightning:messages />
            <aura:if isTrue="{!v.renderName}">
                <lightning:inputField fieldName="Name" aura:id="Name" />
             </aura:if>
             <lightning:inputField fieldName="Type" aura:id="Type" onchange={!c.handleTypeChange}"/>
        </lightning:recordEditForm>
    </div>
</div>

Controller:

({
handleTypeChange : function(component, event, helper) {
    var typeValue = component.find("Type").get("v.value");
    var nameValue = component.find("Name").get("v.value");
    if(typeValue != null && typeValue != '' && typeValue != undefined){
        if(nameValue.indexOf(":") > 0){
            nameValue = nameValue.split(':')[1];
        }
    component.set("v.renderName", false);
    component.set("v.renderName", true);
    component.find("Name").set("v.value",typeValue+":"+nameValue);
    }
}

Use slds-hide instead of slds-hidden.

So the thing is if you just want to disappear the element from the UI then use the slds-hidden and it will take its space.

And to remove the space as well use the slds-hide.