Divorce/Mortgage query ??

spendleb

Hi all, my wife and I are splitting although it's very amicable and we are staying close friends for both ours and the kids sake (complicated split reasons!) but we are unsure what to do about the mortgage, the plan was to keep it in joint names and for me to carry on paying but due to her low income status, we have heard she might be entitled to SMI? If this is the case would we need to transfer to her sole name and being she is on a low income, how would the bank treat this? Scared she would lose the house?

dmg24

Surely if you can continue to afford to pay, you would want to?

spendleb

dmg24 wrote: »

Surely if you can continue to afford to pay, you would want to?

No I can't that's the point, I would love to pay the whole mortgage but it's not feasible for me to pay this and move out and pay for somewhere else. At the moment we are both going to struggle badly once split.

nannytone_2

you say your wife has a low income. if she works she won't get smi, only if she is on certain means tested benefits.

spendleb

nannytone wrote: »

you say your wife has a low income. if she works she won't get smi, only if she is on certain means tested benefits.

Oh right so any work means no entitlement? She works 3 days a week due to childcare, oh well it was just a thought to ease the financial pressure once I move out.

Jowo_2

A lender will not consent to a person with insufficient income taking over the mortgage.

See the Shelter website for information on relationship breakdowns and the various options available to homeowners who are struggling to pay their mortgage - they have a section dedicated to rights when a relationship breaksdown and a section dedicated to homeowners, including a helpline.

Model your wife's lone parent status on the Turn2us online benefit calculator which will show her all her entitlement, including extra tax credits.

Download the MSE budget planner for you each to model all your income and expenses, including your child support (this won't affect her benefits). The split is amicable but if it stops being amicable, and she takes you to the CSA, this calculator will indicate how much of your net salary you are obliged to her pay her. Is there much correspondence between your amicable proposed contribution and what the CSA obliges you to pay?

https://www2.dwp.gov.uk/csa/v2/en/calculate-maintenance.asp

You could then work through the MSE sites seeing where there is scope to reduce expenses and up your incomes.

Based on the budget planners, is there much shortfall between her income and outgoings that would mean the mortgage could not be paid? You also need to do a pessimistic scenario where the mortgage is subject to large interest rate rises. I read in the Guardian or observer recently that few householders are aware that if interest rates go up by a couple of percent, it can add 40-50% on the cost of a mortgage.

RAS

spendleb wrote: »

Oh right so any work means no entitlement? She works 3 days a week due to childcare, oh well it was just a thought to ease the financial pressure once I move out.

Hi

You really need to get this sorted properly.

Your wife needs to go to www.turn2us.co.uk and work out what support she will get (which may include part of then mortgage depending how much is interest payments).

You need to pay 20-25 percent of your net income depending on the number of kids as maintenance and she is responsible for paying the mortgage out of the benefits, salary and maintenance.

spendleb

Jowo wrote: »

A lender will not consent to a person with insufficient income taking over the mortgage.

See the Shelter website for information on relationship breakdowns and the various options available to homeowners who are struggling to pay their mortgage - they have a section dedicated to rights when a relationship breaksdown and a section dedicated to homeowners, including a helpline.

Model your wife's lone parent status on the Turn2us online benefit calculator which will show her all her entitlement, including extra tax credits.

Download the MSE budget planner for you each to model all your income and expenses, including your child support (this won't affect her benefits). The split is amicable but if it stops being amicable, and she takes you to the CSA, this calculator will indicate how much of your net salary you are obliged to her pay her. Is there much correspondence between your amicable proposed contribution and what the CSA obliges you to pay?

https://www2.dwp.gov.uk/csa/v2/en/calculate-maintenance.asp

You could then work through the MSE sites seeing where there is scope to reduce expenses and up your incomes.

Based on the budget planners, is there much shortfall between her income and outgoings that would mean the mortgage could not be paid? You also need to do a pessimistic scenario where the mortgage is subject to large interest rate rises. I read in the Guardian or observer recently that few householders are aware that if interest rates go up by a couple of percent, it can add 40-50% on the cost of a mortgage.

Thanks, at the moment I am offering around £80 more than the CSA calculator comes up with. We do need to review what benefits are available though and count them into the calculations. I do have to agree though, interest rate rises scare me stupid now as it would cause us/her a big problem and switching to a fixed rate is out if the question as it would still rise substantially straight away. Ideal scenario was to sell the house (if we even could, house 2 doors down been on the market for over a year) but I can't do that to her and the kids and she really doesn't want to move.

Jowo_2

I wish I could find the article as it modelled the substantial impact of interest rate increases on the average mortgage.

I suggest that you find a mortgage calculator, info on predicted interest rate increases and a doomsday scenario, so that when you sit and work through your budget planners, you can understand not just the short term squeeze but potential medium and long term suffering.

The only way is up, in terms of mortgage costs. I think people have amnesia about how artificially low the rates have been for such a long time, they have no idea what economic cushioning they enjoy. Go and find a historic chart.

spendleb

Jowo wrote: »

I wish I could find the article as it modelled the substantial impact of interest rate increases on the average mortgage.

I suggest that you find a mortgage calculator, info on predicted interest rate increases and a doomsday scenario, so that when you sit and work through your budget planners, you can understand not just the short term squeeze but potential medium and long term suffering.

The only way is up, in terms of mortgage costs. I think people have amnesia about how artificially low the rates have been for such a long time, they have no idea what economic cushioning they enjoy. Go and find a historic chart.

Trust me I know, in fact my mortgage is still over £200 cheaper than it was just 3 years ago so it can easily increase by that much with two or three .25 percent rises. Still hoping her mum helps her out after coming into a large inheritance but no sign of that so far and we certainly can't rely on it.

Jowo_2

spendleb wrote: »

Trust me I know, in fact my mortgage is still over £200 cheaper than it was just 3 years ago so it can easily increase by that much with two or three .25 percent rises. Still hoping her mum helps her out after coming into a large inheritance but no sign of that so far and we certainly can't rely on it.

And one or two or three whole percent rise? The Bank of England, for all we know, may increase rates every quarter by a quarter or half a percent for many years in a row...


http://www.thisismoney.co.uk/interest-rate-rise-calculator

http://www.whatprice.co.uk/financial/base-rates.html

It sounds like you are hoping for the best but not quite planning for the worst (which is quite typical human behaviour). We are more likely to say that a risk is unlikely to happen and less inclined to think about the consequences if that risk actually happens.

Hoping for a donation from mother in law? Talk about grasping at straws. Start hacking those spreadsheets, including a pessimistic scenario. You know it makes sense.