A Complete Mess.

shaz77_2

A relative of mine has got themselves into a spot of bother in relation to the purchase of a property some years ago. At the time the house was purchased - it cost £70,000 - however a mortgage for £80,000 was taken out as well as one separate loan of £26,000 this was used to complete repairs on the property.

At the time the purchase of the house was completed with a partner who she has subsequently broken up with, both their names are on the two loans however, her former partner has moved out of the house and has stopped contributing to the repayments, he has also got the mortgage company to advise my relative that she should not be bringing in and lodgers. He wants to sell the house however my relative wants to remain living in it.

What should my relative do, I realise this is a real mess and I don't know how she got herself into it.

MarsdenCuckoo

Really sorry to hear of your relative's predicament but hopefully it's not as bleak as you/they are thinking. If she's still living in the house then, it seems to me that she's in a position of strength.

Don't understand the comment about the lender telling her she can't have any lodgers? Isn't there still a 'rent-a-room' scheme still in existence whereby you can rent a room and it doesn't attract income tax? Have heard about not being able to sublet if you're renting, or run a business from premises with a domestic mortgage but taking in a lodger doesn't fit into either of those categories. You sure she's not being duped?

I think it would be a good idea to get her to go and speak direct to her lender asap and explain that she's reviewing her finances i.e.:

* Is there a better mortgage deal she could be on?
* Could she switch short term to Interest Only rather than Capital and Repayment?
* (If it makes sense) Could the loan be rolled into the mortgage to minimise the monthly repayment?
* Could she extend the term of the mortgage and/or loans?
* Ask for a repayment holiday even?

Be aware, of course, that any new financial agreements will require his signature as, indeed, any sale of the house will require hers.

So long as she can service the debt on the property then there's no way he can force her to sell it (provided her name is on the mortgage, of course). If there is any equity in the property, then he'll be entitled to his share up until the time he stopped contributing to the mortgage. (Good idea to get the house independently valued asap after he moved out - just for reference if nothing else.) But he'd have to take her to court to get it, which takes time and, of course, if he were to force a sale then he'd probably lose money too. (Any buyers worth their salt are going to make a very low offer if they find out the house is for sale due to a couple splitting up.)

On the other side of the coin, if her ex is financially an 'easy target' i.e. in a good, well-paid job, then she should be aware that if she doesn't pay the mortgage/loans then they will expect him to pay up irrespective of whether he's living there or not. Financial institutions in my experience take the route of least resistance so if he's earning more than she is then he could be asked to pay up and she can just 'sit pretty'. (Chances are he's wanting to buy somewhere else and/or won't want his credit rating being damaged by non-payment! ) Of course, non-payment on her part will also damage her credit rating and could lead to the house ultimately being repossessed......

Probably sounds unrealistic at the mo but it would be in both their interests to sort this between them rather than involve lawyers - very expensive route and only the lawyers win in the end!

Good luck but seems to me that if she knows someone looking for accommodation and that rental income will enable her to service the debt on the house then there's diddly squat he can do about it (least not for quite a while! :rolleyes: ) Important thing is to talk to the lender asap.

PS: Of course, if she's living there on her own at the mo then she's entitled to 25% discount on her council tax. Possibly other benefits she may be entitled to as well - worth looking into. Every little helps and all that.

Batchy

I wouldn't have thought lodgers wouldn't relate at all to subletting.

The only thing the mortgage company might do is suggest sending out some paperwork for the lodgers to sign to dismiss any claim they have to the house as sitting tenant in the event of a property being repossessed, and all the ball ache that would go along with that for the lender.

Good luck anyway folks!

wannabe_sybil

Sorry - I don't want to be a picky person, but there are legal ways for the ex to force sale, but it is expensive and protracted.

You may find it useful to post on the House Buying board. I am sure I have seen similar posts on there, and there are some real experts on housing law.

Good luck.