Thinking of giving my house away.....

tamsworld

Hi all,
Any advise or help on this topic would be very much appreciated. Im confused, and dont really know where to go from here!

A bit of history:
I bought a house with my boyfriend 18months ago for £230k. The mortgage was £218k. We borrowed £5k from his parents and £10k from mine for the deposit. The house is now worth approximately £200k.

Current situation:
Boyfriend and I split, I have been living elsewhere for a few months, but still paying half the mortgage. Boyfriend is still in house, paying remaining half of mortgage and all bills.
I should also point out that we have remained good friends and everything is amicable and so Im looking for the best way forward for both of us.

Problem:
I cant afford to continue paying half the mortgage.
We have a fixed rate mortgage until June 2009. There would be a £4k fee to end this early.
I want rid of the responsibility, and ex wants to stay in the house and retain ownership.

Possible resolutions (?):
1) If we sell the house now, we pay £4k fee for mortgage, plus lose £30k through negative equity, then have to pay taxes, solicitors fees, estate agents fees etc on top. Boyfriend doesnt have a place to live. We both lose.

2) We hang onto the house until June, dont have to pay the £4k mortgage fee, sell it, but still lose because of negative equity (which would also possibly worsen as the recession progresses)

3) and this is the bit I am seriously considering and need some advice on....
I dont want to retain ownership of the house, I want rid of it. I dont want to be tied to it for another 5years "just in case" the market picks up and it gains its value again - apart from anything, I cant afford to wait that long!
So......
We have paid off £22k of the mortgage since we've lived there. We still owe £196k.
Together we have lost approx £30k in equity.
If I sign the deeds over to my ex boyfriend, I lose the £11k I put into the house in the last 18months mortgage, but then in reality I havent actually LOST anything because there is no profit in the house to repay me anyway. Am I right in thinking this?
Im thinking that the benefits for me are:
I wouldnt have to pay the cost of estate agents, redecorating the house ready for sale, I can relinquish the extra money In having to find for the mortgage each month, I can call it quits and walk away without losing an absolute fortune (apart from the money we still owe to parents which at the moment we have mutually agreed to repay 50/50 seeing as we both still own the property)
He benefits because he retains control of the property, he's still on the property ladder, and can stay put until house prices go back up again. Once they have, he sells if he wants to, he keeps 100% of the profit.

So I guess my questions are:
(if I were to choose option 3)
- am I able to sign over the house before the fixed rate mortgage finishes in June?
- what exactly would I lose financially say the house was revalued at £200k?
- is this a sound idea, or could it lead to problems (if any one has experience of this I would gratefully receive advice!)?
- if I was to sign the house over to him, would it be reasonable to expect him to repay my parents AND his parents in full seeing as its no longer my property? Or should I continue to pay some off too?
- if my ex boyfriend cant get a mortgage on his own to cover it, would I still be liable until we sell or until he figures out a way of making up the extra money?

I understand that Im asking some legal-type questions, but really Im just looking for a starting point as when I try to google for advice Im not getting any suitable sites.....I just want to have a better idea of possibilities before I pay for a solicitor. I just need to sell the POSSIBILITY in to my ex boyfriend before going down that route otherwise Im wasting money researching an idea that isnt feasible!

So as I say, ANY advice is gratefully received!
Thanks,
Tamsworld

Premier_2

You'll need the permission of the lender to sell, transfer or as you put it 'sign over' the property to anyone, unless you have the means and are willing to pay off the loan at the time of transfer.

Looks like it's down to option 1 or 2 then ...

PasturesNew

tamsworld wrote: »

bought a house ... 18months ago ... £230k. The mortgage was £218k.
We borrowed £5k from his parents and £10k from mine
house is now worth approximately £200k.


fixed rate mortgage until June 2009. ... £4k fee to end this early.


Possible resolutions (?):
1) If we sell the house now, we pay £4k fee for mortgage, plus lose £30k through negative equity, then have to pay taxes, solicitors fees, estate agents fees etc on top. Boyfriend doesnt have a place to live. We both lose.

OK, forget that one for now then, let's look at the next choice.

tamsworld wrote: »

2) We hang onto the house until June, dont have to pay the £4k mortgage fee, sell it, but still lose because of negative equity (which would also possibly worsen as the recession progresses)

This is the same as [1] just without the £4k fee - but adding on further value drops (5 months at say £1k/month) - it really doesn't matter if you put it on the market now or in June it amounts to the same thing.

Having it for sale is not the same as selling it, it can take months. Stick it on now and you can specify not to exchange/complete before the June date.

tamsworld wrote: »

3) and this is the bit I am seriously considering and need some advice on....
I dont want to retain ownership of the house, I want rid of it. I dont want to be tied to it for another 5years "just in case" the market picks up and it gains its value again - apart from anything, I cant afford to wait that long!
So......
We have paid off £22k of the mortgage since we've lived there. We still owe £196k.

How come? You have had the house 18 months, your mortgage is probably still the same it was. The £22k would have been INTEREST, not reducing the debt at all.



After that I stopped reading. It was too long to read/answer in this tiny box on the screen....

But the bottom line is:
- the house is worth less
- the house will be worth less each month
- your monthly mortgage payments are mostly INTEREST, not reducing the debt at all

So what if you walk with nothing, it's better than walking with a huge debt in a year.

You can't sign it over to your bf, he has to remortgage/prove he can get a mortgage for that amount on his salary, which he won't be able to.

Selling seems the logical choice.

lynnexxxo

Quick question, does your ex earn enough to get a mortgage for almost 200k on his own?

The house is currently worth 200k you say, so essentially he would need a 97.5 % mortgage. Not likely in the current climate.

You can't just sign the house over to him, you have a joint mortgage meaning legally until the mortgage is repaid you are responsible for half the debt.

One possible solution would be to continue owning the house and get a lodger in to cover some of the mortgage.

If you ex can't remortgage it himself you don't have much option but to sell. If you put it on the market now its likely to be at least June before you manage to sell anyway, which removes the early repayemnt charge.

Good luck, is there no chance you two could work it out?

PasturesNew

I'll now give my opinions (not advice/knowledge) on the other bits

tamsworld wrote: »

Together we have lost approx £30k in equity. - yes and it won't come back
If I sign the deeds over to my ex boyfriend, I lose the £11k I put into the house in the last 18months mortgage, but then in reality I havent actually LOST anything because there is no profit in the house to repay me anyway. Am I right in thinking this? - correct

Im thinking that the benefits for me are:
I wouldnt have to pay the cost of estate agents, redecorating the house ready for sale, I can relinquish the extra money In having to find for the mortgage each month, I can call it quits and walk away without losing an absolute fortune (apart from the money we still owe to parents which at the moment we have mutually agreed to repay 50/50 seeing as we both still own the property)- correct
He benefits because he retains control of the property, he's still on the property ladder, and can stay put until house prices go back up again. Once they have, he sells if he wants to, he keeps 100% of the profit.- no benefit to him. There is no property ladder, prices are falling. He can stay put, putting his life on hold for years and lying awake worrying about it. He could keep 100% of the future profit, but between here and there there's a LOT of insuring it, maintaining it, keeping it safe/watertight and comfy. It's not an investment. A house can be a moneypit. He would lose unless his life really didn't change for years and years to come.

PasturesNew

And finally, I reach the end

tamsworld wrote: »

So I guess my questions are:
(if I were to choose option 3)
- am I able to sign over the house before the fixed rate mortgage finishes in June? - no, nor probably after that date because he doesn't have enough equity or income to enable that to be allowed
- what exactly would I lose financially say the house was revalued at £200k? - not sure, I can't see the figures now I've got to this bit, but you will have to pay off the difference between that and the outstanding mortgage.
- is this a sound idea, or could it lead to problems (if any one has experience of this I would gratefully receive advice!)?- the maths doesn't stack up
- if I was to sign the house over to him, would it be reasonable to expect him to repay my parents AND his parents in full seeing as its no longer my property? Or should I continue to pay some off too?- not sure, it would take some debating because that money's gone in the negative equity, so then it's just down to fairness and maintaining relationships. Might be easier to just sign it over to him and you repay your parents alone. Clean break. However, this is hypothetical at present.
- if my ex boyfriend cant get a mortgage on his own to cover it, would I still be liable until we sell or until he figures out a way of making up the extra money?- yes

Can I have a coffee break now?

Catti

Premier wrote: »

You'll need the permission of the lender to sell, transfer or as you put it 'sign over' the property to anyone, unless you have the means and are willing to pay off the loan at the time of transfer.

Looks like it's down to option 1 or 2 then ...

The OP could at least ask the question of the Lender about a ToE - if payment history good and income multiple stacks up, some Lenders will release a joint borrower in circumstances such as this.

Caz3121

in 18 months you have reduced the mortgage from £218k to £196k
Was this taken as a 10 year mortgage with high payments or are you guesing the outstanding balance based on what you have paid?
I would estimate that you have maybe reduced it to around £210k at best in that time with the rest of your payments being the interest.

If ex wants to stay in house and retain ownership, has he done anything about seeing if a mortgage in his sole name is possible and have it in place to move to it in June when your fixed rate ends.
House worth £200k, mortgage £210k is negative equity
for your ex to take it on he would need to have at least £30k (£10k negative equity + £20k deposit) and a salary of minimum £45k to get £180k mortgage
(you would be responsible for half the negative equity too)

If it cannot be done, it cannot be done...not your problem, not his, just the way things are just now.

silvercar

If the lender won't allow you to remove your name from the mortgage, you could still draw up a legal document saying you have no further interest in the house. You would still be liable for the mortgage if your ex defaulted, but all other obligations fall to your ex.

Robert_Sterling_3

You signed a contract to pay the mortgage.
You are still "good friends" with your boyfriend.
Why did you move out of the property?

Rick62

What you are looking to do is a 'transfer of equity'. The current lender will do this IF they are staified that your ex has enough income to afford on his own - does he have an income of about £60k +?

Otherwise you could do as Silvercar suggests.

I think you are right to get out of the property and right to realise that the value has dropped and you can expect to write this off.

I couldn't follow the arrangement re paying your parents the £10 back, but even if you pay all of this (and let him pay his parents) you will probably be better of than being stuck in a depreciating property in negative equity.