'Internal' mortgage following separation

ms.chick

Hello

My husband and I have two properties in joint names.
I owned a flat in my own name for 4 years, then just before we married remortgaged into the joint names to release some equity.
Same year, we took out another residential mortgage to buy a house. I planned to rent out the flat, and with the rental income covering the mortgage, the flat was considered self-financing in the eyes of the 2nd lender and therefore didn’t count against what we could borrow for the house purchase.

A year and a bit later, my husband has left me but has given me his blessing for me to try and take on the mortgages in my own name. There was no equity in either property at the time he left, with the flat actually in negative equity.

Both mortgages are 95% residential interest only mortgages, and both are on fixed terms with reasonably heavy penalties to end early. Therefore ideally I would like to find a way to maintain both mortgages, as they are, except just in my name.

The flat mortgage was with Bristol & West, and the house with Bank of Ireland. Recently I learned that B&W mortgages have been transferred to BoI, so both are now with the same lender.

I spoke to both a few months ago to find out roughly how I could remove my husband’s name from the mortgages and was advised it would be treated as an ‘internal mortgage’ but I would essentially be applying for the mortgage afresh with my own incomings/outgoings. BoI advised that they would multiply my income by 4.5.

The house is my priority, as I want to continue living here. It seems fairly straight forward, but I am nervous about how to retain the mortgage for the flat as well, or how to even approach the lender to change the house mortgage when they’ll presumably see the other residential mortgage for the flat on their system. If the rental income cannot be counted (with it being a residential mortgage) then my income alone would not cover the cost of both mortgages. I don’t have any savings and would not be able to afford a deposit to convert this to a buy-to-let mortgage.

I wondered if I should ask the lender for permission to let, if that would allow me to stay on the current residential mortgage product. I could also just sell the flat, at the end of the fixed deal, which ends Oct 2010, but with the value so low it's possible that wouldn't cover the outstanding loan.

The details of the properties/loans are: (House/Flat)
The current mortgage loans are: 147k / 180k
The market value at the time of the loans were: 155k / 190k
The estimated market value now: 160 / 175
Monthly repayments: 816 / 854
My income is approx 40k, and I have other monthly debt outgoings of approx 600 (car lease/credit card etc.)

I would welcome any thoughts on how to approach the lender to retain both properties.

JM39

If your flat is in negative equity then they probably won't allow you to do it. I'm in the same situation. Bought a house with my partner three years ago. We've now split and I want to take over the mortgage. Theres no dispute in my income but they won't take his name off the mortgage because it's in negative equity.... They're quite happy to leave the mortgage as it is but have told me the only option I have is to keep paying it until the market recovers...