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  • FIRST POST
    • grobermatic
    • By grobermatic 7th Jul 17, 4:45 PM
    • 3Posts
    • 1Thanks
    grobermatic
    Transfer of Property in Small Neg Equity .. Where do I stand or future profit?
    • #1
    • 7th Jul 17, 4:45 PM
    Transfer of Property in Small Neg Equity .. Where do I stand or future profit? 7th Jul 17 at 4:45 PM
    Hi,

    Just after a bit of advice on my situation, CAB aren't able to help.

    My ex and I own a house bought on a 102% mortgage about 10 years ago, however we broke up and I moved out 4 years ago, she remained there and since I have been paying 25% of the mortgage plus contributing to a few of the other household costs such as buildings insurance. Her brother has moved in and as far as I know has been contributing, but I don't know the details of this. There is currently a small negative equity of about 1.5K.

    She's now wanting to transfer the mortgage into her name, she has suggested she will absorb the negative equity so we can go our separate ways financially.

    While this sounds like an easy way out, and will certainly free up my available credit and disposable income, I am unsure what is the right way to go about this. Lets say she takes over the mortgage and then sells the house in 5 years for a profit, At that point I would on average still have paid roughly 25% of the mortgage payments. Therefore am I entitled to 25% of the future profit?

    I'm not trying to screw anyone over here nor am I trying to bend the rules in my favour, I just want to know what the right way is to go about this?

    Any advice greatly appreciated.

    Thanks
Page 1
    • Thrugelmir
    • By Thrugelmir 7th Jul 17, 5:11 PM
    • 55,924 Posts
    • 49,289 Thanks
    Thrugelmir
    • #2
    • 7th Jul 17, 5:11 PM
    • #2
    • 7th Jul 17, 5:11 PM
    At this point in time the property is in negative equity. That's what matters. The value of the property at a future date is a totally unknown quantity.

    Much of the 25% you contribute to the mortgage disappears in interest charges. So the real gain in 5 years will be far less than you expect. If you were to use the money to pay down existing debts of your own, or contribute to a pension scheme. Then you may well find yourself financially far better off.

    From a personal viewpoint. Separating your financial ties is well worth doing. Simply deferring the decision down the road. Could lead to any number of difficult scenarios. Which could be costly in both stress and cost to resolve. I'd make a fresh start.
    "Wide diversification is only required when investors do not understand what they are doing." - Warren Buffett
    • grobermatic
    • By grobermatic 7th Jul 17, 5:49 PM
    • 3 Posts
    • 1 Thanks
    grobermatic
    • #3
    • 7th Jul 17, 5:49 PM
    • #3
    • 7th Jul 17, 5:49 PM
    Hi Thrugelmir, I take your point and have thought this myself however I cant get out of my head that I put a lot of work into the house in terms of improvements as well as payment and I've not walked away from it and continued to contribute to the mortgage etc. So to just transfer the whole thing over to her, then I'd be left with nothing. I have read about 'Beneficial Interest' not sure if I have understood it correctly but some sites seem to suggest that I would have a claim on future profit even if I do sign it over?
    • Thrugelmir
    • By Thrugelmir 7th Jul 17, 6:51 PM
    • 55,924 Posts
    • 49,289 Thanks
    Thrugelmir
    • #4
    • 7th Jul 17, 6:51 PM
    • #4
    • 7th Jul 17, 6:51 PM
    So to just transfer the whole thing over to her, then I'd be left with nothing.
    Originally posted by grobermatic
    You'd walk away from a further £2.5k of negative equity. The mortgage is a joint and several liability. As far the lender is concerned there are no shares. If the property had been sold earlier you'd still have been liable for the shortfall. By contributing , you've enabled both you and your ex to extract yourselves from a difficult situation. That could have left a stain on your credit record for some years.

    Home improvements don't always add value. Spending money to customise the property to your taste. Means very little. If people subsequently decide to change everything again.

    Appreciate it's not easy. Breaking emotional ties is tough.
    "Wide diversification is only required when investors do not understand what they are doing." - Warren Buffett
    • kingstreet
    • By kingstreet 7th Jul 17, 7:04 PM
    • 32,259 Posts
    • 17,292 Thanks
    kingstreet
    • #5
    • 7th Jul 17, 7:04 PM
    • #5
    • 7th Jul 17, 7:04 PM
    You are unlikely to be released while the mortgage exceeds the value. You may find the lender will request a reduction in the loan to value of perhaps 10% before they will risk releasing you.

    Has anyone approached the lender?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • getmore4less
    • By getmore4less 7th Jul 17, 7:09 PM
    • 30,303 Posts
    • 18,123 Thanks
    getmore4less
    • #6
    • 7th Jul 17, 7:09 PM
    • #6
    • 7th Jul 17, 7:09 PM
    Your beneficial interest is currently likely to be zero or less.

    If you moved out you could claim there is a "nominal" rent for your equitable share which would be the share of the debt you were paying.
    • AnotherJoe
    • By AnotherJoe 7th Jul 17, 7:13 PM
    • 7,599 Posts
    • 8,198 Thanks
    AnotherJoe
    • #7
    • 7th Jul 17, 7:13 PM
    • #7
    • 7th Jul 17, 7:13 PM
    Suppose you were still together and buying another house. There would be nothing to take forward, you'd be starting from scratch, same as you are now. You already have "nothing".

    Get over it and move on.
    • Number75
    • By Number75 7th Jul 17, 10:49 PM
    • 178 Posts
    • 192 Thanks
    Number75
    • #8
    • 7th Jul 17, 10:49 PM
    • #8
    • 7th Jul 17, 10:49 PM
    How would you feel if you signed it over now, walked away, and in 5 years the market crashed and her solicitor told you it was the law that you now owed her £10,000 - half of the fall in value.

    Outraged? Same principle!
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