separating - whats best to do with the house?

samaki

Hi there-

Hoping to get some advice on my current situation. My husband and I are in the process of separating, its been on the cards for a while and so far we have been able to keep it relatively amicable. The one aspect that is causing us grief is our house. Its a 2 bed so even if we are in separate rooms we are getting on each others nerves and there is no way we can really move on with our lives while still being under the same roof..

We bought the house at the peak of the market but got a pretty good deal so we have managed to avoid negative equity. The house is probably worth about 133K and the mortgage remaining is 119K.
We have considered selling it but as we are still in our fixed rate period for the next 2 years we would face a 4k penalty.
I am considering buying him out (my parents would have to help me out) but i am worried if that is a bad move.. i could rent out the extra room to help with the bills but have also calcualted that I could manage the full mortgage alone.
I am also worried that if I decide to not sell after the fixed rate is up in 2 years I would be rejected for a re-mortgage as I am on 29k a year..

sorry this is a little vague, i just thought i'd see what peoples thoughts were as its a little overwhelming for me..
Thanks for reading.

VIGILANT22

You would have to contact your existing lender now if he wants to come off and for you to stay on. they will then decide if your income/outgoings is suffice to take it on.

samaki

thanks- i was a bit nervous about approaching them in case they said no. As things are pretty amicable I considered leaving him on the deeds but i suppose its better to make it all official...?

ninky_2

samaki wrote: »

thanks- i was a bit nervous about approaching them in case they said no. As things are pretty amicable I considered leaving him on the deeds but i suppose its better to make it all official...?

surely it's better to find out from your lender sooner than later if they won't agree to let you take over the mortgage? then you at least know what your viable options are (or aren't). i really wouldn't leave him on the deeds as you never know when things might change from amicable to less amicable. for example, you can't factor in the influence a future new partner might have on him. it would be gutting to pay the full mortgage for several years and for him to then claim a stake in the house.

Money_mad_4

There is really no such thing as him taking his name off, what actually happens is that you apply for a new mortgage in your name, it si likely given your salary that you will find it difficult in the current climate to get a loan. If it is amicable, my advice is keep it that way, get him to move out and hep you with the payments until the end of the fixed rate and then re evaluate your position.

getmore4less

Rough guess on a 50:50 ownership

£133k valuation on house, £119k mortgage

Lets say £130k after approx costs of sale. £11k equity, £5.5k buy out.

New mortgage 80% LTV, £106500, 3.6 salary multiple ok-high(ish)

need another £12.6k to pay off the old loan.

So you need to find around £18k cash to take on the mortgage.

They may let you port the deal to yourself but at the same leel is probably too high a salary multiple, at the lower level it might still incure ERC.

Can you raise £18k between you and your parents?

JA1000

Where did you get that valuation from? What you need to do is get that valuation as low as possible which means your buy out costs are lower. They only real way to do this is to have a survey which again will cost. Worth having a look online at actual sale prices on houses in your area recently.

However, a lower value wont help you too much on your mortgage application due to the LTV. Can you afford to cover the mortgage by yourself?

I am not an expert but I have some questions on this, can you not get your parents to act as a guarantor?

Can you replace your parents on the mortgage?

Can you keep the mortgage as is, buy your partner out for an agreed amount, and draw up a legal contract with a solicitor that he has no liability for it?

The longer he is on it, the higher the value will rise the more it will cost you.

samaki

Hi there-

Thanks for all the advice. Guess I need to have a chat with Nationwide. I am supposing that the fact that we have never missed a payment, have great credit score and no dependants or other debts at all won’t really convince them to let me take it on alone.

I was hoping to leave him on the deeds to avoid the penalty.. but I do appreciate the fact that as much as it seems like it is amicable now it may get sour, especially if someone else comes on the scene… would keeping him on the deeds and getting a lawyer to draw up some sort of agreement be viable?

I will have to see what my parents can lend me. We have done a fair bit of work on the house which has wiped out my savings.. so I am really reliant on what they can help out with. Its really frustrating that at 30 with a decent job, no debt and good credit I still have to rely on them.. but I know I still lucky in relative terms so I shouldn’t complain.

getmore4less

samaki wrote: »

would keeping him on the deeds and getting a lawyer to draw up some sort of agreement be viable?

IF he stays on the mortgage then you remain financialy linked and he will remain jointly liable for the debt.

Even if you are paying he will still have this mortgage taken into account if he wants to get another mortgage.

samaki

ah.. i didn't think of that. if he stays on the deeds then he wouldn't be able to buy anything else if he wanted to.. ? hmm. if i take him off, or re-take out the mortgage in my name then would i be liable for the 4k penalty?