further mortgage or second charge

firefoxteach

Help!
I'm splitting with my partner.
We have a home just valued at 250k - the mortgage (in both our names) we have on it is only 80k (with 17yrs left to run).
We both want me to be able to stay here as we have kids etc and I wouldn't be able to afford anywhere as big on my own.

He can't afford to move out without releasing equity - we were going to sell, in which case we'd get about 70k each but then I started wondering if I could either further the loan or get a second mortgage on the property to release the equity for him with me continuing to pay the mortgage.

I earn £22,700. (he is self employed and earns very little!)

My question is:
A&L say their further loan rate is 4.99% which sounds high to me - would I be better off trying to get a second mortgage from somewhere else for a longer period (which would be cheaper) or is it better to just get a further loan mortgage from A&L and keep it all together?

Also, can I even do this?
Will anyone further loaning or remortgaging look at my income and decide I don't earn enough (mortgage calculators reckons I could get a morgage of between 90-100k) or do they just look at the amount I am wanting to borrow now?
I am very confused about all this as I have never had to deal with any of this myself and am desperately trying to stay in my home!!
Thanks!!

VIGILANT22

I am assuming yr partner is coming off the mortgage, to do this permission has to be taken from the lender....however as you state he's looking for 50% of the equity....approx 85k..An existing mortgage of 80k+85k= 165k on a salary of £22,700, is never going to happen...You say mortgage calculators say you can borrow up to 100k...you stated you have children... as they're dependants their living costs would be calculated and minused from the amount you could borrow..with the figures you state here you wouldn't be able to borrow further

firefoxteach

No - he would either still be on the mortgage or we would transfer the first part of the mortgage into his name only (if we can do that?).
Also, I mis-typed - I would have to give him 50k of the released equity - he'd get the balance when we sold later.
I have no idea if I can do any of this - just desperately trying to keep my kids in a home!
I have an online agreement in principle from my bank (HSBC) saying they'd give me the 50k but that doesn't take into account that it would be a second charge (if that's the right term for a second mortgage on the same address?)

VIGILANT22

So the 50k is for him to put down as a deposit on another property?
You said he's on a low income, how is he going to secure a mortgage for a second home, as both mortgages will be taken into consideration when working out his affordability
You can't have a second charge in one name only when the deeds are in joint names
What you're trying to do is 1) very naive 2) very risky

firefoxteach

No, it's not for him to get another mortgage - he'd be renting. Its for him to retrain so he will soon have a higher income.
So, if we got a second charge (with anyone, not just current mortgage lender) we'd have to get it in both our names?

VIGILANT22

Yes and both incomes will have to be sufficient to prove this..partners are very amicable when raising capital etc....but what happpens later is often very different
If you qualified for this extra 50k you will have increased payments plus he will have a monthly rental....is this affordable?
What if he meets someone else and wants to come off the mortgage your income could never buy him out
What reason are you giving to raise capital

firefoxteach

Well, we've already decided that we'd get it legally drawn up that we would keep the house until our youngest is 18 (which is what the courts would do if we went that way) - if anything like you suggest happens we would sell and there would still be equity.
Dunno what reason to give yet.
All I really need to know is CAN we do it in theory? and we/lawyers will organise future considerations if we decide to go that way.
So, we would need to prove on both our incomes that we could afford the new loan of 130k? (80k current plus 50k equity release)

VIGILANT22

Of course you must, the banks/lenders (I hope) cannot hand out money without completing all the relevant affordability checks....they have to assess the risk
If in future you defaulted and no checks had been done, you may raise a complaint saying well they didn't check to see if I could afford it.
As for reason for raising capital, remember what mortgage fraud is.......

firefoxteach

i wasn't for a minute implying that I was going to commit fraud so there's no need for that tone -I just meant that we only had this idea last night and I haven't thought that far ahead yet.
thanks for your help.

firefoxteach

Sorry if I'm getting defensive - this is my whole life falling about my ears and I just need halp with getting my head straight. I'm already terrified enough right now as it is!

So - I can either :
- further my mortgage in joint names with my current provider if they do their checks and work out that our joint income covers the new amount needing to be borrowed.

- or I can get a second mortgage against the property but it would need to be in both our names (perhaps with 100% in my name and 0% in his)

Is that right?

VIGILANT22

The second mortgage you are referring to is not like taking out a new mortgage, it is basically a loan secured against the property known as a charge, so this would be a second charge. You cannot take out a 2nd charge in a single name when the main mortgage is in joint names, both parties would have to consent.
I dont know what you mean 100% you and 0% your partner, you're both jointly responsible in the case of a joint mortgage/loan/charge.

Why don't you consult a whole of market mortgage adviser instead of struggling with something you have no experience of