Buying Ex out of Mortgage

hanskib18

Hi all,

My boyfriend and I bought a house back in April but unfortunately things haven't been working out too well and I'm in the process of building up the courage to ask him to leave.

Basically, we got a 100% mortgage for £83,000 and as my income (especially given the current economical environment) isn't enough for me to obtain the full mortgage on my own, I am considering 2 options:

1) Putting my parents on the mortgage in place of my soon-to-be ex but living alone and obviously paying for it alone - like guarantors I guess.

2) My grandparents have generously offered me £40,000 to pay off his half of the mortgage, leaving me with a 50% mortgage in just my name.

Now at first I thought well obviously I go for number 2, but I'm worried about the early repayment charges etc being astronomical... any hints/ideas?

I'm still leaning towards option 2 because I feel that it would put me in a better long-term situation, but I am struggling to work out how much this will cost me in early repayment charges, legal fees etc.

Many thanks in advance

edinburgher

Sorry to hear that thinks haven't been working out for you.

I'd think that option 2 seems to be preferable, with a few caveats. As you say, there will doubtless be associated legal and early repayment charges. You need to speak to a solicitor and your lender pronto. I should also add that your grandparents' £40k may lose value in a falling house market - it's not an issue if you want to stay in he property long term, but could affect you if you sell quickly.

Also, without knowing any of the circumstances, please speak to your boyfriend. This is going to be a stressful time for both of you and you need to give him warning.

hanskib18

Thank you for your advice. I'm planning on speaking to him ASAP, we just want too different things out of life.

Anyways, I agree with what you said about the value of the money, and this is something that I will discuss with a solicitor. Having said that I am planning on being in the house for a few more years.

Thanks :-)

POSSETTE

Do you have to pay GP back at all or is it a gift to you? Presume you dont have to pay it back.
I would consider putting it in a high int account and using it to make some of the monthly payments you are already making ie your half of mortgage out of your wages and his half out of account, just until you reach the point in your mortgage agreement where there is no fee to pay a lump sum back,if you get what i mean!

hanskib18

That's a really good idea Possette. I'm allowed to pay up to 10% of the mortgage each year without charge so if I can put my parents on the mortgage as guarantors in order for them to give me the full mortgage then I could do what you said. I will discuss it with my grandparents as I obviously want them to be happy with what I'm doing with their money!

Debt_Free_Dreamer

Don't forget to check any joint insurance policies you may have for the mortgage.

feisty1

[quote=POSSETTE/hanskib18] QuoteDo you have to pay GP back at all or is it a gift to you? I would consider putting it in a high int account

Are either of you aware of tax implications on gifted money?

POSSETTE

good point..if the giver dies within 7 years of gifting it to you,i believe you have to pay 40% tax dont you?

silvercar

If the donor dies within 7 years, the gift would be considered part of the estate. The actual amount payable (as a tax on the estate) depends on the total value of the estate and the length of time elapsed since the gift was made. Google "potentially exempt transfers (PET)" for more info.