Need some advice (sister split from boyfriend)!

pivotalgubbins

Hi guys,

I hope that I have chosen the most appropriate forum for this, but I need some initial advice on a tricky situation. My sister has just split from her boyfriend after five and a half trouble-free years together. I'm not going to go into the reasons but it is pretty much terminal, he has treated her badly enough for it to be very difficult to repair.

Anyway, the complication is that they purchased a house together around a year ago, price was approximately £115k and they had a 10% deposit (share of this was pretty much 50/50). In addition they have around £5.2k still owing to my Mum (again, 50/50) who helped them with the deposit (it was bought ahead of schedule as it was a well-priced, perfectly placed property for them).

In the short-term, he has stated that he will continue to pay the mortgage which means there is no immediate pressure. There is no way he'd want to live there going forward, so that is not a concern either. My sister does not want to sell, she knows that after all the costs she'll walk away with nothing and it'll be impossible for her to buy another place elsewhere on her salary (around £18k over two jobs).

Obviously, eventually they'll have to sit down and discuss the way forward and we will attempt to ensure that the best deal is reached for my sister to keep the house. She cannot afford the mortgage on her own (it is just over £100k, so more than 5 times her income) but my Mum is happy to step in alongside her and hopefully she will be able to rent a room (or two) to cover the shortfall (so my Mum should hopefully not need to pay anything). If that is not possible then I'll be happy to step in instead (I rent a room and cannot afford much more than a shoe-box in lovely Reading).

I want some advice on the steps and likely costs going forward (aside from the negotiations with the boyfriend, that's for them to handle). They are on a fix-term deal (I assume with an early repayment charge, too raw to ask for details right now) and I would have thought it would mean that he would need to be 'replaced' on the mortgage - is this usually possible? What legal fees would be involved - is this simply the costs of having him removed and Mum/me taking his place? Is there anything further they need to consider (e.g. do we need to get an agreement drawn up prior to any mortgage dealings that state how the transfer will be down, what money will be paid, etc)?

Sorry for the long-drawn out post, as well as the fact that is I'm not asking clear questions as such. However, any advice or experience of this process, the steps that we need to consider and so forth would be much appreciated. I'd like to avoid talking about their relationship directly, that's for them to handle but for the purposes of this thread I would like to assume it is over and finished.

Thanks in advance for any assistance.

silvercar

Any change of name on the mortgage would require the consent of the lender. The lender needs to be happy that the new name would offer reasonable security for the lender, so think of the credit rating and earnings of the new person.

The legal costs of transfer of equity (= legal term for changing the names on the deeds) would probably be £2-400.

Generally the deeds are transferred at the same time as the mortgage, as the names on both should be the same.

As for money transactions, the house could well be worth less now, so it may be a case of someone leaving with nothing but being rid of responsibility for the mortgage.

Legally joint mortgage holders are both jointly liable for the mortgage, moving out and relationship breakdown's don't negate responsibility.

Blacksheep1979

you're worrying about being able to afford/get a mortgage - are you sure he's not going to want money? He may well (rightly or wrongly) believe there's equity in the house and if there is it's only fair that he has a claim.

pivotalgubbins

silvercar wrote: »

Any change of name on the mortgage would require the consent of the lender. The lender needs to be happy that the new name would offer reasonable security for the lender, so think of the credit rating and earnings of the new person.

The legal costs of transfer of equity (= legal term for changing the names on the deeds) would probably be £2-400.

Generally the deeds are transferred at the same time as the mortgage, as the names on both should be the same.

As for money transactions, the house could well be worth less now, so it may be a case of someone leaving with nothing but being rid of responsibility for the mortgage.

Legally joint mortgage holders are both jointly liable for the mortgage, moving out and relationship breakdown's don't negate responsibility.

Thanks for the advice, much appreciated. I must admit that the costs do not appear as high as I thought they would be.

There is a question mark on the value of the house, as they have installed GCH and decorated two of the bedrooms in the last year, so there could be a argument that some value has been added. However, there is still a considerable amount of work to be done and any sale would invoke the ERC charge on the mortgage, so we want to use this to keep the cost to my sister in 'buying' him out to a minimum.

At this stage there is no risk that either would not pay the mortgage, actually I know this would not occur in the short-term as we'd cover the deficit whilst the situation is resolved, if need be. I don't think the boyfriend would let us down in that regard in any case, he has acted badly but I trust him to be sensible in the short-term.

Thanks again.

pivotalgubbins

Blacksheep1979 wrote: »

you're worrying about being able to afford/get a mortgage - are you sure he's not going to want money? He may well (rightly or wrongly) believe there's equity in the house and if there is it's only fair that he has a claim.

I think there is a definite chance he will want some money and I've prepared my Mum for this (my sister isn't really up for the discussion at the moment, this will come in time, I'm just getting in some early research).

I wouldn't want to argue that he may be due a share, however I'd want to try and limit this as much as possible, at the end of the day he has walked away from things without even trying to work through things and ultimately I only have my sister's interests at heart and she would really like to keep the house.

I'm straying off topic in any case, if we do need to raise the funds to pay him off them I'm sure this will be possible.

Thanks for the response.

<sebb>

I understand that your sister wants to keep the house, and that you guys are willing to help her out now. But if she hadn't of met the bf and just wanted to buy a house on her own, would you be willing to make the commitment that you are making now (ie joint mortgage with her). You say that you are willing to help, but what happens when you want to buy your own at a later stage?

You also say that your mum hopefully won't have to pay anything but what can she afford to if your sister cannot always get paying tenants. Or when your sister gets older and gets bored of sharing? It doesn't seem to make financial sense to sell up now and occur the ERC on the mortgage, but realistically are you sure that you or your mother helping out makes sense in the long term?

pivotalgubbins

<sebb> wrote: »

I understand that your sister wants to keep the house, and that you guys are willing to help her out now. But if she hadn't of met the bf and just wanted to buy a house on her own, would you be willing to make the commitment that you are making now (ie joint mortgage with her). You say that you are willing to help, but what happens when you want to buy your own at a later stage?

Very good question and honestly, probably not, but then no-one saw this one coming, has knocked us for six (and I'm a bit of a cynic, being 27 and single for what seems like an eternity).

Needs must at this stage, I'd like to avoid being on the mortgage if possible so that I can purchase my own place at a later date, but I' be happy to delay that if it means my sister can benefit. Easy decision for me, but every family is different.

You also say that your mum hopefully won't have to pay anything but what can she afford to if your sister cannot always get paying tenants. Or when your sister gets older and gets bored of sharing? It doesn't seem to make financial sense to sell up now and occur the ERC on the mortgage, but realistically are you sure that you or your mother helping out makes sense in the long term?

Good points again, I think my Mum would be happy to take the risk in the short-term and would happily assist over the next 1-2 years where necessary. I'd be confident that in that my sister could get tenants and that her lowly wage should progress over time and hopefully coincide with her desire to have her own space (or eventually met someone she deserves).

I've no concerns that my sister would do the right thing by either myself or my Mum, we are all very close and if in the long-term she had to sell, I'm certain she would be prepared to accept that.