Split with Partner and house in negative equity

robstoke83

Hi,

I am seperating from my ex and we brought a house together two years ago on a 100% mortgage. We brought it for £117000 and its now valued at £110000.

I am willing to take on the mortgage as I can afford it and wanted to keep more of the possesions in the house due to the house being in negative equity.

He doesn't think this is right. In theory should he not pay me £5000 as I am taking on his share of the debt or does it not work like that.

Any advice would be appreciated.

Thanks

tattycath

So if it were the other way round and he wanted to take on the mortgage and keep most of the possessions, would you be happy paying him £5,000 as well as losing property and possessions?

beccad

Sorry if I'm being dim, but where has the £5000 figure come from?

robstoke83

I would have to pay him £5000 if the propery had gone up in value by £10000. I didn't say I wanted to keep all the possesions. It worked out just a couple of extra items like the washing machine.

If we sell tomorrow we would both be left owing the bank £5000 each so I just wanted a bit of give and take and to maybe take the washing machine as a result I'm saving him £5000. If he could take the house on it would be different but he can't.

robstoke83

Sorry - If we put it on the market for £110,000 it would sell for £107,000 around there. Which is where half the £10k came from.

If he could take it on I would happly walk away .

beccad

He effectively loses whether you sell or not, if you request his half of the negative equity. I'm inclined to think that if you buy him out of the mortgage, then you take on whatever the financial situation is of the property now. Incidentally, have you checked a bank will lend you the money to buy him out?

robstoke83

I have put in a application to remove his name from the mortgage - A change of parties application.

They may come back and say no - I really don't like being in this situation.

Retro_Bunny

What state of repair is the house in?
Could you draw up a list of repairs on the house (renovations if you like) to bring it up to say £115k and asked the partner to invest in the house to help 'clear' their debt? (hence justification for their £5000).

Take professional advice, but given that the housing market is picking up again and houses rise in the long term, if you can take on the debt and it's affordable, I'd be tempted to let them cut their losses and walk away with nothing (and no money to you). You will benefit in the long term.
Is the house in a sellable area or area you want to live in, for say 10 years? In which case you'll win long term and may save yourself the short term hassle (although this would cost you more).

Also tattycath puts it in simple terms - what if it was the other way around - what would your response be?

david29dpo

A fair split is 50/50 of the profit or loss at todays prices. If you both sold now with a £10K loss, you both pay £5K. So i think if you buy him out, he pays you £5K. Thats fair. Dont hold your breath that the lender will allow his name to be removed though.

maninthestreet

robstoke83 wrote: »

Hi,

I am seperating from my ex and we brought a house together two years ago on a 100% mortgage. We brought it for £117000 and its now valued at £110000.

I am willing to take on the mortgage as I can afford it and wanted to keep more of the possesions in the house due to the house being in negative equity.

He doesn't think this is right. In theory should he not pay me £5000 as I am taking on his share of the debt or does it not work like that.

Any advice would be appreciated.

Thanks

Has your lender agreed, in principle, that they are happy for you to take over the entire mortgage? What is your annual gross income?

Richard_Webster

You will be fortunate if your lender agrees to release your ex from his mortgage obligations - some lenders are only prepared to do this if the mortgage debt is reduced to the loan to value ratios that they are now offering!

If they do agree to release him he can walk away and maybe get another mortgage in the future without if harming his credit rating. If he stays on the mortgage if you can't pay he will be stuck with black marks because of your default. If he is worried about that factor then he may be prepared to pay something to come off the Land Register and be free of his mortgage obligations.

On the other hand if he walks away and you carry on paying the mortgage and the property is still in joint names, when eventually you get out of negative equity you still need his signature to sell and at that point he may want paying something.

As it costs a few thousand pounds to argue about these things in court it usually follows that the person in the weaker negotiating position ends up conceding something.