transfer of equity following separation

marrioa

My son and his wife have split up. They jointly own a house worth £95k now, but paid £110k for it in May 2007. I lent them the deposit of £6k. Due to unemployment, 6/7ths of the mortgage payments were made jointly, with 1/7th being paid by my son alone. He wants to transfer the equity into his name. The Bank of Ireland (UK) has assessed his income and stated that they will lend him £99k, but this figure is based on the original value of the property. He will need to pay £1.7k to reduce the capital. He also needs to pay £300 in fees to the lender, as well as conveyancing fees to a solicitor. His ex wants at least £1,500 paid to her to cover her share of the mortgage payments made over the 3.5 years. She will not pay back half of the deposit.

Is this a fair shared responsibility?

What are the chances that the Bank of Ireland will refuse my son's application?

Is there an alternative solution?

Thank you

silvercar

Is this a fair shared responsibility?

The only thing that is fair is breaking any financial ties. How much that should cost is debatable, but there is a non-monetory value.

I can't seen why the wife needs her mortgage payments back, she may have an argument for asking for some of the capital back (I take it the mortgage has reduced from 104k to 100.7k), but she would have been paying rent had they not bought, so the interest payments are money gone to provide a home.

The situation is now that the wife has joint liability for a 100.7k mortgage on a property worth 95k. On pure numbers there would be a case for her paying half of the difference to be rid of the financial obligation! Your deposit has been swallowed in the drop in value, that is tough but its only on paper; if your son keeps the property eventually it should reappear.

What are the chances that the Bank of Ireland will refuse my son's application?

They may not do a new valuation, given that he is already part owner. If they do revalue and if your 95k figure is correct, they may only lend a lower amount.

Is there an alternative solution?

Do nothing, wait for the property to increase in value then sell and argue over the equity.

Tell her to buy him out.

If current lender won't give the right deal you could try another one, though if the value is really going to be that low I doubt you'd get anything elsewhere.

marrioa

Thank you for your reply, it makes a lot of sense and has helped clarify certain issues. I think my son's worry at the moment is where he is going to find the money to pay his ex the amount she wants while having sole responsibility for paying off the debt.

Lance

It does not sound as if there is any equity. Have a few estate agent valuations and work out the lose from a sale and ask his girlfriend if she wants half the debt left from a sale or to walk away with nothing and leave him with the debt. Getting the bank to remove her from the mortgage will depend on the valuation and his earnings so may not be easy. Sounds like she needs a reality check.

mario75

Hi
I want to transfer mortgage only for my name as I split with my partner, we have 5 yr fixed and we have taken mortgage this year on May. When i have phoned to bank lady said that is no problem but redemption fees will need to be paid as they must open for me new account. ERC is about £4 000 quite a lot!!! Could you tell me pleae, your son need to paid redemption fees too??? Why they want to charge me if I still want to carry on the same mortgage, the same payment and the same product?