Mortgage help concerning a break-up

nathan39

Sadly my former girlfriend is leaving me and we have a joint mortgage. She has given me two options, 1) to sign the property over to me (though Iam not sure she can do this). 2) Sell the house.
We had the house valued in jan 2010 while considering a job move. we were informed that we would be lucky to break even, if it did at all sell. I have sought advise from CAB but am waiting for them to get back.
I suspect that even if the mortgage lender was happy with the name change on the mortgage (I suspect we would be in breach of contract) I reckon they would make me remortgage and I would be stuffed.
If we sold the house at a loss what would happen about the deficit? I know we would be liable, but how does it all work? I do not want to alert the mortgage lender yet as Iam worried about the consequences.
She plans to move back with her parents (taking our son), however she will have to pay rent to them. She will only have a part time job and Iam worried about the finanical welfare of us all.
I would be greatful of any help as it is a hard and confusing time. Thank You

BabyBoots

Sorry to hear about your break up. I went through a similar process, where my ex boyfriend remained in our home and took on the mortgage by himself. He continued to pay the same each month. The mortgage firm were happy to assign the mortgage into his sole name and we paid a couple of hundred each to solicitors (you each need a separate solicitor) to transfer legal ownership of the property.

It's really up to you as to whether you would be happy to stay in your home. It can be good for your stability in terms of lifestyle at a difficult time (and possibly for your son) not to have the upheaval of moving. If at the back of your mind you are hoping your former girlfriend might eventually move back in if you were to reconcile, that can be a reason to stay (a bit of a double edged sword depending on whether this is likely). Equally you might prefer a clean break, and to find a smaller place of your own without the associated memories.

Financially, the question is can you afford to stay in your home? Living alone is a lot more expensive than as a couple. You do get a 25% council tax discount, but for house insurance, internet/cable connection, TV licence, heating, water (unless metered) you pay the same for one person as two. Would you consider having a friend (or indeed a stranger) as a lodger to help make ends meet?

Have a go at drawing up a budget for mortgage and bills etc and see if you can afford to stay on your own. Consider if you'd be able to bring in extra income with a lodger, or through extra work. If these aren't viable, look at remortgages you can afford, given what you've worked out.

If you sell the house for less than your mortgage balance, you would have to make up the difference from any savings. Bear in mind you would also have to pay estate agent fees to sell and if you moved into rented you would generally need two months rent up front, together with admin fees.

There is a page on the independent money made clear website about difficulty repaying your mortgage, try this: http://www.moneymadeclear.org.uk/hubs/home_mortgages.html

Regarding the financial welfare of your family, I suspect your girlfriend on a low income will be eligible for tax credits and possibly other benefits.

I hope this helps. Good luck.

ItMightBeUsefulOneDay

Sorry to hear of your break up especially with a child involved. These things are always difficult. Until all the paperwork is done, you are both liable for the mortgage even if she isn't living there any more.

First question for you to decide is, "Can I afford the house on my own?" Be realistic in drawing up a budget that covers everything - use the SOA from the Debt-Free Wannabe board if needed.

The second question is, "Do I want to stay here?"

To remove her name from the mortgage will cause the bank to look at the whole deal again. You say that, "they would make me remortgage and I would be stuffed" - why? Have your circumstances changed that much since you first took out the deal?

You may well be better off selling and splitting any loss between you - she is equally liable for any shortfall just as you are.

nathan39

Thank you both for your replies. I susspect I would be stuffed because the monthly repayments would be higher and at some point the interest rates will go up. Also we got the mortgage on joint salary. My salary alone does notquite equal the joint amount from four and half years ago.
I have been paying all the bills including the mortgage so technically I could manage. since maternaty she has been part-time. However there is now child maintainace to consider and Iam without a car. There will also be traveling cost to see my son as he will be living a 7 hour round trip away.
I'm not really sure I want to stay here anyway. I never wanted to move into the area. Also the house is too big and full of memories. I also feel nervous taking a lodger on as I would not want a stranger in the house while my son is staying.
The house is in negative equity by 9-14k. I don't want that hanging over our heads and I don't think she will be able to afford to pay the deficit. Neither of us have any savings and our families are not in a postion to help (and nor would I want them to).
The only thing I can think of is to let it out, that is if we/ I can get a buy-to let mortgage.
Rereading this it looks like I am putting up barriers. I guess Iam but its very difficult time.

Thrugelmir

Bite the bullet and sell up. As difficult as it may seem. Arrange to meet your lender asap and explain the situation. Although you may need to take a few steps back before moving forward again. The sooner you relieve yourself of the worry and stress the better.

ItMightBeUsefulOneDay

nathan39 wrote: »

The house is in negative equity by 9-14k.

...This means the bank's aren't likely to allow this...

nathan39 wrote: »

The only thing I can think of is to let it out

Most BTL mortgages require 25%+ equity in the house. They are also expensive with an arrangement fee of 2%+ to set up and the interest rates are often punitive. On top of this the rent should cover 125% of the monthly mortgage payments - take a look at rightmove or similar to get an idea of rental values in your area.

Being a landlord isn't easy, you'll need to cover voids where the house is empty, repairs, all manner of things. Don't jump into being a landlord, get some advice if you really want to go down that route.

Selling up and moving on with your life may be the best option right now. Yes you'd have a shortfall that would need to be covered but you'd make a clean break from it all and be free from the stress and hassle over the house.