Buying ex partner out of mortgage / house

CloudCuckooLand

You say you've had no viewings in two months - a week ago you thought it might now be worth £250k, so if its on for that when a valuation puts it at £215k, then no wonder there have been no viewers - you need to re-market at the right price, before you make this massive commitment.

What is fair is to compare the buying price and current valuation, and split in accordance with the % share owned/deposited. i.e. split the £15k loss. The £10k you have paid in the meantime could be considered "rent", in light of the negative equity.

I fear it will be easier from a mortgage and long-term viewpoint if the ex was the one to do the buying out.

Having saved £85k once, he presumably has a larger income than you - making getting the mortgage easier. Your AIP for £161k may turn out not to be worth the paper it is written on.

A 5x income mortgage is crucifyingly big. And with rates so low, you could find yourself in serious financial difficulty a year or two from now, when they rise. Losing the house in the process. And that's before you even begin to pay back the £50k from the parents.

Thinking of which - was the lender informed of the £50k obligation when seeking the AIP? It should be declared and will affect their stance on affordability. It is most definitely something to do with them, if you want their £160k in return.

What "alternative repayment vehicle" will you put in place to support the Interest Only £160k mortgage?

Though, it reads as you have made your mind up and no-one's comments are being taken on board. I really think you need to sit down, preferably with someone neutral or the parents if that's not possible, and just ask yourself - is this really the best long-term solution or are you throwing good money after bad. In my opinion.

CloudCuckooLand

guidarufino wrote: »

Moral of the story, don't buy a house with someone unless you're totally and utterly 100% sure you're going to be with them forever!

Also, that you should have the property % split defined upon purchase, not leave it until its all gone pearshaped...

The legal position upon selling, if the house was purchased as "joint tenants", is that you split the equity 50/50, end of...so if the ex has failed to protect himself with a % split based on "tenants in common", then you don't have to go out of your way to fund his demands...

guidarufino

I take your point about the pricing of the house. But neither of us can afford to take a loss on the house. If I lost my equity in the house, which I would if it only sold for £215k, then I'd have nothing to start again with. And I know for a fact he wouldn't accept any offer that caused us a loss anyway so that's just not an option.

Equally him buying me out isn't an option. His large deposit came entirely from inheritance, he only earns about £16k so buying me out isn't possible and doesn't have parents who can help him out so that's a non starter. I have offered to take care of the mortgage if he moves out and rents elsewhere until we can sell but he refused. I would move out and rent myself but he can't afford to cover the mortgage so there's a very real possibility I'd end up paying rent elsewhere and a mortgage for a house I'm not living in. Plus my cat is really old and just had major surgery so I don't want to move her if I can help it.

I know that the mortgage is going to be huge and less than easy to manage. But if rates do start going up to the point that I can't manage, presumably things will have picked up and I'll be in a better position to sell.

The £50k is going to be a private arrangement between myself and my parents, hence my saying the bank don't need to know. There is obviously a possibility that they put a second charge on the house but I don't think they'll want to do that. We're very close and they know I'm not going to con them in any way. And they're my next of kin and named beneficiaries of my life insurance so if I popped my clogs, they'd be fine.

I've got a firm offer for £161k now, not an AIP. I haven't got an alternative repayment vehicle to be fair and I know that's not ideal. I know that none of this is ideal but at the end of the day I'm stuck in a horrible situation. I've had a messy break up and on top of the usual crap that comes with that, I still have to live with the guy. Every other solution I've proposed which doesn't involve me taking on huge amounts of debt he's refused. If you or anyone can think of another way out of this please tell me.

I think we did set it up as tenants in common. We always said we would draw stuff up about what to do if we split up but never did... Obviously we never thought we'd split up.

So are you saying that we should split the £15k loss according to how much we put in to start with? Tell me how much to offer him and what you think is fair! An additional complication is that I paid a higher % of the mortgage over the years as I earn more than him which I was happy to do when we were together but may complicate things now. There's not much in it to be fair, 57%...

Thrugelmir

guidarufino wrote: »

I know that the mortgage is going to be huge and less than easy to manage. But if rates do start going up to the point that I can't manage, presumably things will have picked up and I'll be in a better position to sell.

Rising interest rates in the current econmic climate will only put further downward pressure on house prices. Your taking no risk yourself as in reality it'll be your parents that take the financial loss.
As your repaying no capital either you are little more than renting the property.

Your ex and yourself have to face reality. No one likes losing money. However better to bite the bullet sell up and start afresh. The only other alternative is that you come to an amicable arrangement to share the house and bills. Continuing to repay the mortgage with an agreed split of the equity. So when the situation have changed sufficently then you can both go your seperate ways.

beecher2

guidarufino wrote: »

I know that the mortgage is going to be huge and less than easy to manage. But if rates do start going up to the point that I can't manage, presumably things will have picked up and I'll be in a better position to sell.

This is a huge presumption, and in my opinion a disaster waiting to happen. No solution is going to perfect, but far better to sell at a realistic price and take the hit now than struggle on and end up in even more debt.

evoke

Agreed. Take the hit now and go your separate ways. It's a relatively small loss now and won't be messy. The future, given what you've told us, looks extremely messy.

Trollfever

Between a rock and a hard place.
Draw a line.

guidarufino

I do see where you're all coming from but I just can't do it. If I lose my equity, I've got nothing, not a pot to !!!! in. I've worked so hard to get debt free and put money into the house to lose it all now just because we've broken up at the bottom of the market is too hard. So I'd be back to renting again as I'd have no deposit to put down a new place. I've looked at what's out there on the rental market and really don't fancy it. And I'm pretty sure he wouldn't agree anyway.

And you're all assuming we could sell the place. Even if we did drastically reduce the price, that's no guarantee it'd sell.

And I don't want to sell the house, I love it. It's gorgeous and has got huge potential to be made even better. We always talked about doing stuff like knocking through but never did because we couldn't agree on anything, obviously one of our problems!

Any financial loss to my parents only happens if the house gets re-possessed which is extremely unlikely. I run my own business which is profitable and growing and has been for more than five years now. And if things got really tough, I could always not pay them for a couple of months and use the income from the lodger(s) to take care of the mortgage.

If I knew there were some end in sight, like 6 months say, it would be easier to cope with living with him. But if we stay put waiting for a buyer, we could and probably are talking at least a year until we're out of there which is just so horrendous I can't even go there. If he and I were capable of living amicably together, we probably wouldn't have split up in the first place! So now I have to cope with all the same arguments and hassle but get none of the benefits of being in a relationship! It's awful and while we're still living together neither of us can get on with our lives. :-(

CloudCuckooLand

You have nothing NOW...only your parents bailing you out is keeping you in the place. On a property you cannot afford to pay any capital off. You might as well just rent somewhere.

Sell at a small loss, which still means you get to take £80k equity out (roughly) - Ex gets most of that, you get a little, then go your own ways.

Then take £50k from your parents as a deposit on a place you can more readily afford. Say 3x income. Don't over-extend. On a repayment basis.

Ex doesn't have to agree, a solicitor can (subject to the specifics of the joint/common arrangement) force the sale.

guidarufino

My parents aren't bailing me out now, I'm paying my own way. It's only if I buy him out that they would be.

Let's say then that we sold, and you say I could force the sale legally, is that right? I imagine that would get pretty ugly but ok.

So let's say the valuation is accurate and we'd get £215,000 for it.

Current redemption figure is £127,000 which means we'd be left with £88,000 - estate agent fee of 1% = £85,850.

So how would we divide that between us?

Never thought of borrowing £50k of parents for more affordable place, probably wouldn't need that much anyway. Though would have to get somewhere big enough to get a lodger so that was always the plan for paying them back.