Relationship seperation causing hassle with loans

xlinephil

Following a recent split from my wife, I am really struggling with how to work out my finances. My current situation is: My wife is looking for a job to pay the mortgage so she can stay in the house, I am fine with this. We have a secured loan to the value of 31K on it and an unsecured to value of 7.5k.

The mortgage company will not allow my wife to take the mortgage on on her own due to payments coming from tax credits amougst other sources. So I have decided to simply keep the mortgage in my name and allow her to pay me each month the amount and review it each year.

I am taking on both loans but will struggle to pay them and rent somewhere of my own. My question is: how can I consolidate the two loans without securing them to the house in order to reduce my monthly payments?

CHR15

This does not sound like a good long term plan.

What will happen when another guy moves in with her and the payments to you stop?

What happens when you want to settle down with someone else but you have this ball and chain of a mortgage holding you back?

Will she really continue to plough money into a mortgage on a house in someone elses name?

This may be a reasonable short term solution whilst everything is so complicated but you really need to be looking at a clean break.

Secured borrowing is invariably cheaper than unsecured but even so, obtaining almost £40k unsecured and end up with cheaper payments is impossible.

Is there enough equity to sell up, clear debts and go seperate ways?

CLAPTON

sounds like a disaster about to happen

rther agree with CHR15 unless simply for a month or two while the house is sold

KingElvis

Yep, things turn really sticky when other people start sniffing around, I had a situation like this back in 94 which failed becuase the ex's new man convinced her to stop paying etc

It all turned messy and I was lucky to escape with my financial reputation intact. Never again but good luck.

xlinephil

I know all this but I dont want to uproot the kids. If she did stop paying she would have to leave and I would move back.

KingElvis

xlinephil wrote: »

I know all this but I dont want to uproot the kids. If she did stop paying she would have to leave and I would move back.

That's a good attitude to have mate and again, I wish you luck. Just because mine turned to c*ap doesn't mean your situation will.

So may people don't consider their kids in this kind of situation.

Tixy

Well it is probably advisable for you to set up a rental agreement between you, you own the house and she is paying you rent (with which you pay the mortgage). Otherwise when you come to sell you may find major problems in splitting any equity or mortgage shortfall between you.
Don't just trust that things will work out okay because you are both acting in the children's interests, you need to have everything properly documented and agreed.

That said when you come to want to buy a property of your own or getting any new credit having that mortgage will have a big impact on your chances. And if wife stops paying will you be able to pay the mortgage, your current debts and your rent until your rental agreement ends? if not you could end up in a very difficult position where you are unable to meet your commitments and end up defaulting on agreements etc.

As to your original question, you will not be able to get an unsecured loan to consolidate a £31k secured loan. You could consolidate them all on the property. Could you extend your mortgage term to reduce outgoings? or switch to an interest only mortgage so that some of the money your ex pays in rent can go towards your loan repayments?

xlinephil

kids should always be number one, I couldnt give a damn about her tbh lol

xlinephil

if I did switch to an interest only mortgage, how does that work? Do the mortgage company have to approve it, and then what happens in 10 years time when the interest is all gone?

xlinephil

Or, and this might be a bit dodgy, but if I took her name of the mortgage but she legally rented it, could I accept housing benifit payments from her on it??

Tixy

Yes the mortgage company would have to approve it, it would be like applying for a new mortgage. What would happen is that instead of each payment being part interest and part capital you would only be paying the interest part. So in 10years time you would still owe the same amount of capital as you do now and so your monthly interest payments would still be due each month.