Mortgage, Redundancy and Divorce

smerch1468

I have a very complicated situation where I am currently going through a divorce and have just been told that I am to be made redundant in May.

The redundancy money clears all debts and gives me a breathing space to meet my day to day bills for at least the next 9 months.

I also have redundancy protection insurance which will cover my mortgage payments for up to 12 months while I am looking for new work. I have just been speaking with a careers coach who has told me that it may take 6 months to secure a similar job to the one I have right now.

On the divorce front we are starting to go through the financials. I want to buy my wife out of her share of the property which thanks to family I can afford to do so. The problem is changing the mortgage over from joint names to my name. Naturally the bank will be reluctant to allow this as I have no income.

The outstanding mortgage is £178k, the value of the property is approx £260-£270k. I have a 1/3rd share of an inherited property which is worth £120k but has no mortgage(this is my mums residence).

My mum is 70 and has various pensions/benefits which add up to approximately £1500 per month. My future inheritance from this property will be approx £180k.

In July the mortgage will revert to a svr of 2.99% (assuming base rates are unchanged) with repayments being less than £600 (interest only). I have pension plans which are currently worth approximately £100k.

It doesnt appear that long to wait until I get a new job but the ex mrs wants to move out now and remove any financial ties with me.

Is it worth approaching the bank with a view to having the property in joint names between me and my mum?

Crinz

Who is the mortgage with?

A lot of lenders have imposed maximum age limits on mortgages meaning that you will have to reduce the term of it. (probably to a 4 year mortgage)
Obviously you are on interest only so this is not going to affect your payments but if you dont manage to get the account in your name over the next 4 years then you will be in the position of the lender calling in the loan and you not being able to settle it without selling.

for £180k mortgage you will also need a joint salary of somewhere in the region of £40-£50k (very rough figures)

I see a couple of problems in all of this so not sure what your next steps are

Thrugelmir

smerch1468 wrote: »

Is it worth approaching the bank with a view to having the property in joint names between me and my mum?

Unlikely that your lender will consider your mother as "suitable" to underwrite the mortgage.

Maybe consider marketing the property while continuing to seek new employment.

smerch1468

Crinz wrote: »

Who is the mortgage with?

A lot of lenders have imposed maximum age limits on mortgages meaning that you will have to reduce the term of it. (probably to a 4 year mortgage)
Obviously you are on interest only so this is not going to affect your payments but if you dont manage to get the account in your name over the next 4 years then you will be in the position of the lender calling in the loan and you not being able to settle it without selling.

for £180k mortgage you will also need a joint salary of somewhere in the region of £40-£50k (very rough figures)

I see a couple of problems in all of this so not sure what your next steps are

The mortgage is with Bank of Ireland (formerly B&W). If the bank reduce the term to 4 years that is fine, I expect to be earning at least £40k in my next position and at that stage I should be in a position to take on the mortgage in my own name outright.

Thanks

Crinz

smerch1468 wrote: »

The mortgage is with Bank of Ireland (formerly B&W). If the bank reduce the term to 4 years that is fine, I expect to be earning at least £40k in my next position and at that stage I should be in a position to take on the mortgage in my own name outright.

Thanks

you would still need to satisfy current requirements which based on the information you have told us would be unlikely. The income would be far too low just now.

Selling may be the only option unless the ex sees reason

smerch1468

Crinz wrote: »

you would still need to satisfy current requirements which based on the information you have told us would be unlikely. The income would be far too low just now.

Selling may be the only option unless the ex sees reason

I dont agree that selling may be the only option. With LTV of around 68% I would consider the BTL route if I cannot secure a job before January 2012. The figures stack up, Post office for example offer 4.99% fixed for 2 years which is a repayment on IO of £740 against a rental value of the property which is £1600 pm.

That would be a way of getting the property in my name without having a salary, Bank of Ireland have already intimated this.

Crinz

Good news that you have found another option. Had a look at the Post Office and it seems like quite an open deal. A lot of lenders have minimum income requirements so its useful that they dont have anything like this.

Presumably to get IO on this though you would have to confirm the repayment vehicle?Not sure as it seems quite flexible in other ways but I cant imagine them doing it on IO without a way to repay the loan.

Am ahppy to be proved wrong though

Thrugelmir

Crinz wrote: »

Presumably to get IO on this though you would have to confirm the repayment vehicle?Not sure as it seems quite flexible in other ways but I cant imagine them doing it on IO without a way to repay the loan.

Am ahppy to be proved wrong though

You are indeed correct.

Maximum 75% loan to value on interest only borrowing with a suitable repayment plan

smerch1468

Crinz wrote: »

Good news that you have found another option. Had a look at the Post Office and it seems like quite an open deal. A lot of lenders have minimum income requirements so its useful that they dont have anything like this.

Presumably to get IO on this though you would have to confirm the repayment vehicle?Not sure as it seems quite flexible in other ways but I cant imagine them doing it on IO without a way to repay the loan.

Am ahppy to be proved wrong though

Repayment vehicle will be future inheritance, estimated at 200,000. Also have pensions worth 100,000 (of course quarter can be taken as a lump sum).

If they are still picky about this scenario I am happy to pay money into ISAs/Pensions out of the surplus rental income. For a 25 year repayment buy to let, repayments are 1039 so either way it seems to stack up, in fact it would be madness not to consider taking the repayment option as someone else is effectively paying for my mortgage !

blueberrypie

smerch1468 wrote: »

Repayment vehicle will be future inheritance, estimated at 200,000. Also have pensions worth 100,000 (of course quarter can be taken as a lump sum).

The lender won't accept a future inheritance as a repayment vehicle. They want something guaranteed - an inheritance isn't. The person leaving the money could blow it all on on-line poker or leave it all to a cat charity instead. And while *you* might be convinced that they won't, the lender won't see it that way.

smerch1468

blueberrypie wrote: »

The lender won't accept a future inheritance as a repayment vehicle. They want something guaranteed - an inheritance isn't. The person leaving the money could blow it all on on-line poker or leave it all to a cat charity instead. And while *you* might be convinced that they won't, the lender won't see it that way.

My mum cant play on line poker, she could leave her money to a cat charity but ive seen her will so I think im ok.

Looks like the capital repayment option then.