Some opinions please on a seperation and a mortgage?!

lisal0u

Hi,

To cut a long story short my boyfriend left after only being moved into our new house a month!

We bought it in July 2008 and spent a year and a half renovating it to great cost. We have spent more than it will ever be worth because it was supposed to be a long term home! We bought it for £90k and have probably spent £25k (16K was borrowed on the mortgage) on the renovation. It was recently valued at £108k (two at £105k and one at £115k) and the outstanding mortgage is £104k. We are in a fixed mortgage for 5 years and the early redemption fee would be 4% so almost £5k. Including solicitors and estate agents I would be looking at £8k to sell. So selling the house would actually cost us money at the minute

I moved out to live with my Dad (majorly regret this now) and he is still living there. I am still paying half the mortgage.

A couple of weeks ago he changed the locks!! I have sought legal advice and know he cannot do this and I am entitled to a key. I have requested one but he has refused saying he is uncomfortable with me having access. He has said if I have a key he will move out and stop paying half the mortgage. I cannot afford to pay it all myself at the minute.

I have an option to take on the house myself once my Dad helps me out with some inheritance but this may take several months!

He doesnt want the house and is happy for me to have it but Im not so sure its a good idea, would I be lumbering myself with a massive debt Ill never get a return on?!

My options are:

Sell
Take it on myself
Him take it on (banks said we could just do a transfer of deed to just his name costing about £400)

Im really not keen on the last option as I will come away with nothing but the debt of the renovation and will never have had chance to even enjoy the house! Im also concerned he may shack up there with his "friend" which I couldnt bare after all that hard work and my life basically being on hold for the last year and a half!

I just really confused about what to do and would like a few opinions or advice! There may be something I havent though of!

I have half considered calling his bluff about the key and demanding one or even moving back in!

Thanks in advance
Lisa

Fire_Fox

What do you actually WANT to do? I don't understand why if he takes over the mortgage you get left with a debt but if you take over the mortgage you need your inheritance - to pay him off?? Whose name(s) is the debt for renovation in? Clearly the part that was against the mortgage is in joint names, but what happened to the rest?

You might agree to him moving out and take in a lodger or two then pay the whole mortgage yourself? Move into the smallest bedroom yourself for the best return: IIRC £4250 per year is tax free income if you register for the 'rent-a-room' scheme. As soon as your inheritance comes through, get him taken off the mortgage.

You have NOT "spent more than it will ever be worth", property prices always increase over the long term. In the short to medium term property is considered to be a gamble not an investment by many experts. At the end of the day the fact that the property is not worth what you have paid out is NOTHING to do with the relationship ending, had you stayed together you would still have lost money due to the recession - you'd either be selling and crystallising that loss or staying put and waiting for the market to rise. It is irrelevant whether you have, say, a £10K loss in a joint debt or a £5K loss each the debt is still the same size.

lisal0u

Fire_Fox wrote: »

What do you actually WANT to do? I don't understand why if he takes over the mortgage you get left with a debt but if you take over the mortgage you need your inheritance - to pay him off?? Whose name(s) is the debt for renovation in? Clearly the part that was against the mortgage is in joint names, but what happened to the rest?

To finish the renovation I had to use credit cards, he had savings for his half of it and used his credit card. The inheritance would be to clear the debt so that I can the afford the mortgage on my own. With no debt I can afford it and easily if I take in a lodger or two!

You might agree to him moving out and take in a lodger or two then pay the whole mortgage yourself? Move into the smallest bedroom yourself for the best return: IIRC £4250 per year is tax free if you register for the 'rent-a-room' scheme. As soon as your inheritance comes through, get him taken off the mortgage.

That is a good idea and I will definately look into it! There is a bit of finishing off that needs doing before I could rent it but it will be difficult fo me to do this having no access! The bank have said that I earn enough for a transfer of deed so its a definate possibility!

At the end of the day the fact that the property is not worth what you have paid out is NOTHING to do with the relationship ending, had you stayed together you would still have lost money due to the recession - you'd either be selling and crystallising that loss or staying put and waiting for the market to rise. It is irrelevant whether you have, say, a £10K loss in a joint debt or a £5K loss each the debt is still the same size.

To begin with I wanted the house as I dont really want to jump off the ladder to find its much harder to get back on in a few years time! Im just concerned that if the market doesnt pick up Ill be stuck with it and not be able to move if I want to.

Thanks for the advice!

Fire_Fox

Of course the market will pick up, it always does! I don't have a crystal ball so I cannot guarantee that there will not be a 'double dip' but this should become apparent soon after the national election, and you will not have taken the house on by then. Historically it takes a few years for the market to pick up again (fits in with your mortage anyway), as long as you are happy with that and have the space for lodgers then you will be fine. With a fixed rate at least you won't be subject to interest rate rises, and of course your wages will increase over time ....

As long as the house is a safe place to inhabit you can rent our rooms immediately, you just may need to reduce the rent slightly for your first lodger to take account of any unfinished work. You might even find the whole experience fun, many people make friends with their lodgers! If you sell you will be in far more debt than now, as you will have half the costs, half any loss as well as your credit cards. I suspect the house is not worth as much as you think, check out land registry sold prices
https://www.houseprices.co.uk

I am a bit confused about your finances. Not meaning to be nosy, but surely if you had stayed with your ex you would have had to pay half the mortgage, half the bills and all your credit cards? You moved in so you must be able to afford this?? Why would you not get enough rent from a lodger to cover half the mortgage and at least part of the bills?? You might be slightly worse off but you have found MSE and it won't kill you to live like a hermit for a few months until your inheritance comes through.

lisal0u

The mortgage is £700/month. I thinks I could get enough rent to cover half the mortgage.

I was just managing paying half the mortgage, bills and all my debts so I would not be able to pay it all myself without the help of Dad or like you say a lodger.

Ill look into getting a lodger and see how easy it is. I live in a fairly small town so I dont know how many people will be looking for a room!

I am far too old to be living with my Dad ha ha!

Ditch_Crawler

lisal0u wrote: »

The mortgage is £700/month. I thinks I could get enough rent to cover half the mortgage.

I was just managing paying half the mortgage, bills and all my debts so I would not be able to pay it all myself without the help of Dad or like you say a lodger.

Ill look into getting a lodger and see how easy it is. I live in a fairly small town so I dont know how many people will be looking for a room!

I am far too old to be living with my Dad ha ha!

Be aware that if you have more than two lodgers who are not part of your immediate family, your house will become a House In Multiple Occupation, with a whole raft of expensive regulations to comply with.

DC

Fire_Fox

I would not want to be living with my dad, yet paying half of a mortgage for a house which I had no access to. My personal opinion is that it is a bit rich for BF to say he will not pay the mortgage if he moves out, yet that is exactly what you are doing! There is ALWAYS someone looking for a room, in a small town there may be fewer lodgers but there will also be fewer lodgings.

You know the ex as well as anyone, he sounds fairly sensible with money if he had savings? Surely he would not want the two of you to default on the mortgage? Does he understand that getting repossessed means you can be chased for the shortfall for up to TWELVE years?

This is the budget planner used by the Debt free Wannabe board
http://www.makesenseofcards.com/soacalc.html
I would complete one in full and post here or there for comments. Every outgoing should be up for discussion: for example I didn't have a landline for several years just a mobile phone. I currently don't have a TV license as I do not watch live TV (not needed for iPlayer).

lisal0u

Hi,

Just stopped by for an update!

The ex has now moved out and I have a key again! He says he is going to keep paying the mortgage but needs to do some sums to check that he can afford it. Im not convinced of this as he now has a new woman and a new life to fund!

My options are still the same:
Sell and lose money or leave it on the market till we get what we need
Transfer it all to him - like this idea even less now, now he is with the friend.
Keep myself - I will financially struggle! I cannot remortgage on my own at the minute so his name would have to stay on the mortgage.

Each option is not great as I lose money that I dont have.

My financial situation wasnt great before all this happened and I was trying to sort all my debts out. If I took on the house this is what my figures would be, not good at all:

Monthly Income Details
Income from Employment (after tax). . . . . . . . . .1,615.14

Monthly Expense Details

In Your Home

Mobile Phone(s) . . . . . . . . . . . . . . . . . . . . . . 35.00
TV Licence. . . . . . . . . . . . . . . . . . . . . . . . . . 12.00
Electricity . . . . . . . . . . . . . . . . . . . . . . . . . . .40.00
Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.00
Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16.00
Council Tax . . . . . . . . . . . . . . . . . . . . . . . . . . 75.00
Overdraft Cost. . . . . . . . . . . . . . . . . . . . . . . . .63.00
Home Insurance. . . . . . . . . . . . . . . . . . . . . . . . 38.80
Mortgage/Rent . . . . . . . . . . . . . . . . . . . . . . . . .700.00
Food and Household Shopping . . . . . . . . . . . . . . .80.00


Motoring & Public Transport

Petrol/Diesel . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.00
Car Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.00 (per year)
Car Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 17.00

Debt Repayments

Credit Card Repayments. . . . . . . . . . . . . . . . . . . . 320.00
Hire Purchase Repayments. . . . . . . . . . . . . . . . . . .122.30
Personal Loan Repayments. . . . . . . . . . . . . . . . . . .230.53
Car Loan Repayments . . . . . . . . . . . . . . . . . . . . . 202.98

Entertainment

Satellite/Digital TV. . . . . . . . . . . . . . . . . . . . . . . . .44.00

Odds & Sods

Regular Charity Donations . . . . . . . . . . . . . . . . . . . .3.75


Total monthly income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,615.14


Total monthly expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,120.36

As you can see I would need to find £500/month to keep the house and would have no money to do anything!

My Dads inheritance looks like it may take months and months, maybe a year to come through and I cant see the ex wanting a tie to the house for that long!

If I hand the house over to him Im left with a lot of debt and nothing to show for it and will struggle to get back on the property ladder.

Which ever option I choose I lose out but its just which one would be the better option?! Which one would be the better choice for my future?

Would there be any merrit in going to speak to a financial advisor and seeing if there is anything I havent thought of? Ive been thinking what would happen to me if I didnt have family to live with, what would be my options then?

Sorry for the ramblings, Im quite stressed about it all now!

Any advice welcome
Lisa

[Deleted User]

You haven't mentioed how much debt you actually have - this would give an understanding of how long you would be paying it for - how many months/years until it is paid off.

Your mobile phone bill is high? - How long are you tied into contract? - there are many sim only contracts/pay monthly with several hundred anytime/any network minutes and unlimited texts for £10/£15 per month.

Your gas and electric are high for one person (you will be out at work most days I imagine) - check if you are with the cheapest company? Cheapest tarif?

Would it be possible to reduce your mortgage repayments for a short while? Or switch to interest only until your inheritance comes through?

Car tax 35/12=2.92/month

Can you switch any of your credit card debt to interest only cards using balance transfer?

Satellite/cable is a luxury you cannot afford - either reduce to the minimum package until contract ends - or if possible, cancel the contract.

Again, currently charity donations should be put on hold until you can afford them. If you feel strongly about this try donating your time instead.

Are there any oportunities for overtime or a second job until the inheritance comes through.

As for your ex not being keen on being tied to the house - his name is on the mortgage, he IS tied to the house and there's nothing he can do about that.

Regshoe

What immediately strikes me is that even with your ex contributing 50% of the mortgage you still wouldn't be able to afford to live their alone:

£2120 - £350 = £1770 (still £155 above your income).

Presumably prior to your split you must already have been building more and more debt, or at the best just breaking even (as some of your bills like Electricity etc would have been split two ways).

As Domino9 points out the length of time left on your various loans is important. You have a high proportion of your income going towards paying off debt: a total of £939 out of £1615 (58%) of your income (I included the loans, credit cards and overdraft costs).

Even if you could cut your spending in all areas you still cannot afford that house without increasing your income (by at least £505 if you pay all of the mortgage yourself or £155 if your ex keeps paying 50% - note these are net figures so you would have to earn quite a bit more pre tax). This is unless some of those debt repayments will soon be finished. Switching to interest only may help but possibly not enough. Taking in a lodgers could make a big difference, though if you are footing the full mortgage yourself you may struggle to fill the £500 per month gap (and this will of course exceed the allowance in the rent a room scheme).

Speaking in terms of short to mid term financial gain your best course of action (based on just the information you have provided) would seem to be to let your ex take the house and mortgage if he can. I know it would be unpleasant and that you would be paying off debt for something you will no longer be able to enjoy. One way of looking at that is to consider that you will be paying off the debt incurred in renovating the house whatever you decide and given your current circumstances you would only be incurring more debt.

You might not like to give up the house, but presumably it would be even more unpleasent if you ended up in serious financial trouble/repossessed/bankrupt a few months down the line.

lisal0u

Thank you for your input

Domino9 wrote: »

You haven't mentioed how much debt you actually have - this would give an understanding of how long you would be paying it for - how many months/years until it is paid off.

I have about £25k of unsecured debt, credit cards, 1 loan, car, kitchen. Mostly built up from the house renovation and having to live in a flat at the same time!

Your mobile phone bill is high? - How long are you tied into contract? - there are many sim only contracts/pay monthly with several hundred anytime/any network minutes and unlimited texts for £10/£15 per month.

Unfortunately im tied in fro another year Stupid iphone, shouldnt have got one!

Your gas and electric are high for one person (you will be out at work most days I imagine) - check if you are with the cheapest company? Cheapest tarif?

Im not actually sure what the gas and electric will be, I havent had a proper bill yet so that was just a guess, thought it was better to guess high.

Would it be possible to reduce your mortgage repayments for a short while? Or switch to interest only until your inheritance comes through?

This could be an option, Ill have to see if the bank would do this as there is no equity in it at the minute.

Car tax 35/12=2.92/month

Can you switch any of your credit card debt to interest only cards using balance transfer?

I have been looking at this today. Halifax have a balance for life which may be a better option due to the large amounts. My credit rating is good as I never miss payments.

Satellite/cable is a luxury you cannot afford - either reduce to the minimum package until contract ends - or if possible, cancel the contract.

I would try to get rid of this, I think Im tied in fro a year but need to find out when that ends. I could at least reduce the package to the cheapest!

Again, currently charity donations should be put on hold until you can afford them. If you feel strongly about this try donating your time instead.

Are there any oportunities for overtime or a second job until the inheritance comes through.

I have been looking at getting a second job, this would help a lot!

As for your ex not being keen on being tied to the house - his name is on the mortgage, he IS tied to the house and there's nothing he can do about that.

I actually went to see a solicitor about my rights regarding the house. He told me that either of us could force a sale or stop paying the mortgage. I just cant decide if its better to cut and run or if this is a big mistake and property is worth hanging onto even if it means me struggling financially for a few years?!

Im not in the best frame of mind for making life changing decisions which is why I am gratefull for level headed ones from you helpfull MSEers! x