Mortgage, when a couple split up.

Katye_2

Hi
I just need to ask if anyone has experience of this..
A family member age 24 has recently bought a house £159,000 ! with his GF, its not working out, and its not even a year!

They have decided I think to call it a day.. this post is based on the info I know, the mortgage is over 25 years - repayment .. we think that the value of the house in todays climate has depreciated approx £30,000 - £40,000 in the 9 months they have had the property, to be confirmed by valuation next week

The mortgage alone is £800 plus per month... and not enough coming in the house to cover everything... think they got carried along with the " dream of being homeowners".. the reality has come as a shock!

Do you have to be in a property for X amount of time with a mortgage company before you can sell?

Would it be better for them to move back with parents and rent out the property at this stage, and can they ?



any advice appreciated.

bubblesmoney

i doubt if the rent will cover the mortgage and even if it did, the couple who now dont want to be together will be forced to deal with each other for a long time when they rent out the property or even if they decide to put it for sale as it might take a while to sell. if they want to sell fast they will have to aggressively price the proper after it being valued by a very realistic EA. EAs might hype the value of a property just to get the marketting fees off you.

if they want a quick exit then selling at a loss is whats going to happen and they will have to cough up the loss to the sale price. if they cant produce the loss amount to clear the mortgage they might have to take loans and pay it off over a long time and at a high interest rate most probably. not a nice situation to be in. they need professional advice ASAP if they dont want to dig a bigger hole for themselves.

getmore4less

Not realy enough info yet,

Some things to consider.

The first issue will be do they have negative equity, if they sell they will still have debt to pay how will they fund this?

If they keep the place they(split up couple) will have a joint asset that will probably be a drain on resources/relationship not so good.

If they rent will the rent cover the costs if not they still have a problem with it draining resources and there will be the ex couple issue.

Clean break is probably the best option so that will be sell or one of them takes the place on, is that a likely senario, even if one can afford the mortgage if negative equity the other will need to offer some cash.

Mortgage, repayment is a good sign but are there any tie ins or early repayment charges, could increase the costs of selling.

Depending on how bad things are equity wise bankrupsy is an option, if they are 100% mortgage and £30k short this might be a good option. it would not be wise for any family members to bail them out unless it is a small amount.

Oldernotwiser

Perhaps one of them might want to carry on living in it and advertise for other people to share. Whilst not ideal, this could be a better option than losing £20,000 each at their age, which they probably don't have anyway.

shirlgirl2004

How many bedrooms does said house have? Could one live in the house and rent out rooms? Would they move back home or find somewhere else to rent? If they have to rent elsewhere it might be a cheaper option to stay put and rent out some rooms if the house is big enough. They'll probably be liable for £20k each so funding some mortgage (along with rental income) might be cheaper than funding a £20k loan. Realistically they need to get a few figures together and do the maths.

getmore4less

Even if the numbers do stack up with one staying and renting out rooms, it still leaves the other party dangling with the liability, not a good long term senario.

Katye_2

Thanks for your replies,

I think at this stage, one of them buying each other out wouldn't be an option- not enough money and loans ever mounting.. I have since found out that they have maxed out credit cards.. gone into overdrafts, on top of not being able to stand each other!

Its a three bedroom house, so maybe one rent a room may be an option
as has been pointed out they are going to have to be dealing with each other for quite a while, the thing is the GF works in a solicitors who dealt with the conveyancing, and our family member really dosn't even know much about the Mortgage he has been tied into, loves young dream gone wrong, big time.

She says "jump" he says "how high" and now he's very scared as to what to do and where to go from here

he's gone along with it, as with alot of youngsters they want the best- and now ! .. hence ever mounting debts.

Not a good prospect to declared B/C at 24. They havn't done that much to the house only cosmetic on a couple of rooms, hence I think the valuation is going to be way lower than they are thinking, and now is such a poor time to be trying to sell without these circumstances.

One thing I was concerned about is that when the mortgage was going through, the mortgage company only saw one wage slip from my family member? Surely at that point seeing the money he was making would have flagged an issue, and his GF is a legal secretary and only 23, so won't be making a huge amount either.

I don't even want to think about the interest they are paying.. he's coming to see me today, so I can ask more, but the last time we spoke I asked what rate he was paying & if he was variable fixed etc.. he didn't have a clue.. and therein lies the problem for him now, he dosn't know what the heck is happening, I think he merely signed on the dotted line!

getmore4less

Katye wrote: »

Not a good prospect to declared B/C at 24.

This is not that big a deal ,discharged in a year there might be some income payment order

Try to keep this mess going and it will be with them for years and possibly end up with bankrupsy anyway

Clean break from the relationsship and the financial mess, lesson learnt

I wonder how much of this stuff is in his name only?

If a lot of it is joint and the OH family don't like the Bankrupsy option let them bail them out.

Katye_2

The mortgage is joint

He has a Visa, they have a joint bank account.. which has an overdraft which they are in now.

She has credit cards in her name, plus she's just taken out another loan in her name, I hope to god he listened and didn't add his name to it ! she was talking about another 10K to consolidate all the credit cards and bank loans she has.

edited to add he also has his own bank account, the joint account was for them to put money in each week to cover household outgoings.

Katye_2

oh just as an added bonus.... they bought a dog!
So we'll be having custody battles over her now- what a mess.

SouthCoast

and his GF is a legal secretary

Where I live offices are closing and staff are being made redundant.