Split up - How do we handle the flat and mortgage

[Deleted User]

I've recently split up with a long term girlfriend, about a year ago we bought a place together. We had been living there for about 2 years previously to buying the place as I'm not sure if that will have any effect on things going forward.

We havent made any decisions and were still in contact and we are now trying to work out where we go with sorting the flat out.

The flat is in both our names and we bought the flat for 65k, putting down a 15% deposit which we both contributed 50% to.

I just wondered what our options might be?

I'm guessing the most sensible option would be to sell, pay off the mortgage (likely to cost us as its a 3 year mortgage) and split any profits.

However she has said I should keep the flat but pay her back her deposit plus half of the cost of some of the improvements we have made (Central heating, new bathroom etc..).

I currently earn about 32k plus a 4.5k car allowance so I could cover the current mortgage myself.

The current mortgage over three years was designed to run for 20 or 25 years (need to check th paper work), so I guess I could see if the flat is worth anymore than we got it for an re-mortgage in the hope I have enough to pay her what she is owed.

Potentially rambling a bit here but if anyone has any advice it would be appreciated.

zzzLazyDaisy

Do you want to keep the flat? Are you currently living there? If not, what would you do with it?

If you sell it, you are unlikely to make a profit after estate agents fees, solicitors fees and any redemption fees are taken into account, and far more likely to make a loss, bearing in mind that in most places property prices are stagnant. This could mean that there may be a shortfall which you would need to find from somewhere.

I suggest that you get a couple of estate agents in to value the property and make it clear that you want it pricing realistically for a quick sale (this will hopefully avoid the EA giving you a high quote to get your business and then advising you to drop the price once you are on the books). At least then you (and she) will have a better idea of what you are dealing with.

DVardysShadow

I agree with zzzLD. The first question is do you want to keep the flat?

You may be sitting on a small loss of equity. In which case, it is not necessarily fair to you that you pay out your ex's share of the original equity - and some elements of the cost of selling should come from her equity, even if you decide to remain.

If you decide to sell, then you could pay your ex half a reasonable rent, but she should then pay half the mortgage. If you decide to stay, you should not do this but conclude a deal ASAP.

[Deleted User]

Think getting the estate agents in might be a step in the right direction.

ItMightBeUsefulOneDay

Flats have generally been hit hardest in the devaluation stakes so it may be worth less than you think. With an 85% mortage, you might find yourself very close to zero or negative equity. Get it valued by 3 estate agents and remember that asking price (their view) is not actual selling price (the real value of the flat).

Since the property has been owned for such a short time, you're probably better off selling and walking away sharing whatever profits / loss are made. Clean break for both of you.

Lovelyjoolz

You're not going to be able to avoid the redemption fees because the only way to get her off the mortgage is to remortgage in your own name. And she won't be able to buy anywhere else on a mortgage until it is done.

You also have to hope that your lender will remortgage you as a single person. Just because you think you can afford the repayments, doesn't mean that your lender will agree with you! they will look at your provable salary and multiply it by a maximum of 4. Will £128k cover the remaining mortgage AND what you need to pay her?

I don't think that converting the mortgage to a buy-to-let deal and renting it out would be an option either as the LTV ratio would be too high.

Your first step should be to get the house valued. Have a look on findaproperty dot com to see what similar properties in your area are selling for. Then you can work out if you're likely to make a profit or not. If there's no profit to be made, then the only fair thing to do is to sell it and both walk away.

[Deleted User]

Im hoping we haven't hit negative equity, we thought we had grabbed a bargain 12 months ago simply because the flat above us (Identical in size) went for 25k more than we paid for ours.

Obviously its correct to think that the price may well have dropped lower but based on the improvements we have made I'm hoping we've increased the value.

Sale of the property is looking much more straight forward to me right now, as ItMightBeUsefulOneDay says, Clean break for both of you.

hazyjo

There's no guarantee you'd get the money back on the improvements made - I did tonnes to my old house, but ended up selling four years later for the price I paid.

I'd not take that into account at all. If it's increased the value, great. But you'll need EA's valuations for that. And even then, people would generally be making offers, not paying the asking price.

I always think selling is the easiest option when it comes to break-ups - or someone's bound to feel cheated out of something!

Really not ideal - you probably will lose money - but it might be the best option. Unless you decide to stay and pay her her a lump sum, but it's so hard to know what to take into consideration, especially if it is in negative equity! Would she pay you if it is? Nope, I doubt it.

Jx

zzzLazyDaisy

hazyjo wrote: »

Would she pay you if it is? Nope, I doubt it.

Jx

Be aware that, if you sell the house, and find there is a shortfall owing to fees and/or negative equity, then that money will need to be found for the sale to go through.

What will you do if she simply refuses to pay her share?

[Deleted User]

If it gets down to her not paying her share then thats the way it will have to be. We are both as eager to soft this out as quickly as possible, in an ideal world one of us would be able to continue to live there and take out a new mortgage however with mortages not being the easiet of things to get hold of and the prospect of potential negative equity selling gets us out.

Remaining mortgage is 54k ish, roughly speaking I need to be able to give her around 8k if i were to stay or she could stay and do the same. It all boils down to what its worth, what we can afford and what we can agree.

[Deleted User]

Zoopla is telling me:

Zoopla Estimate: £84,117

Value change £1,927 (2.3%)

Value range £75,957 - £92,277

A stuido flat in our block sold in Dec 2010 for 55.5k, but our flat is much larger than a stuido having proper, bedroom, bathroom and kitchen.

The property sold before we bought our flat was sold for 95k and its identical to ours but that was back in 2008 and was sold to a property developer who now rents it out.

Im not thinking wow 95k that must be what ours is worth, Im thinking worst situtation and best (never going to happen) situation.