Splitting Money

LivvyLoo_2

Hi,
I am not sure where to post this question and have been lurking round the forums for a long time now.

My husband an I have recently split up, we are trying to make it work although I am not sure if I want to as he has put me through a lot over the last year...don't want to share the details just yet.:(
Anyway we have a house and child and we did have a lot of debt which I am now able to afford comfortably through taking out a loan in my name and buying a car and paying off the debt I owed on existing loans and credit card.
My husband then tried to get a loan to pay his part of the debt off but was refused. The problem is that one of these loans is a joint one! So he has agreed to pay the monthly payments out of his money but my question is this?
If we split up I will need to get a mortgage in my name (will have about £60k deposit for a £170k house), I wondered if when the mortgage people looked at my debt and saw that I have one loan in my name and a joint one (both about 19k), will they take into consideration that I don't pay one of the loans or will we have to agree to pay it off in full with the profit? I don't want to pay it out of my profit as I have paid my part of the debt off but if husband doesn't agree to it then I will have paid another 10k over what I have already paid.
Am really worried about this as its making the decision to leave him really difficult, if they do say we have to pay the loan off will they give me a mortgage under these circumstances or will they just look at my debt and say no?
Many thanks in anticipation for your help. Sorry if it doesn't make sense.
LL

MummyOfTwo

you need proper legal advice on this one. i dont want to sound cynical because i dont know the score, but ex-partners often start out with the best of intentions but things can sour, especially when one shows signs of moving on. you could find yourself left with a lot of debt.
solicitor appt is your first port of call, i wish you well:)

Cornish_piskie

Hi, sorry to hear of your split.

The only way to find out whether you would be able to get a mortgage is to see an advisor. Both the loans would have to be taken into consideration as your name is on them - I would imagine that 2 loans of 19k apiece would have a fair impact on what size mortgage, if any, you would be able to secure. As I said, seeing an advisor is the only sure-fire way of knowing - good luck

LivvyLoo_2

Hi,

Thank you for your advice. I went to see an advisor previous to me getting my consolidation loan as he suggested it, not realising OH wouldn't be able to get one. I do realise things will go sour seeing as OH is obsessed with money, which is why I need to get all the money sorted out...its just eating me up with the worry as I have enough to deal with let alone the worry of not being able to get a mortgage.

I will go back to see my advisor and see what he can suggest.

lvm

As far as I know some lenders use current credit agreements in different ways. Both loans will definitely be taken into account though.

So...lenders can work out what mortgage you would be entitled to (3.5-4.5 times your salary) then deduct the loan amounts from what this figure is.

Others will take the loan repayments into account when working out your affordability.

One HUGE problem which you need to look into first is the fact your husband has been refused credit. Because you have a joint loan, this could also affect you when it comes to applying for a mortgage. You need to be closing any joint account you may still have then disassociate yourself from your husband via the credit reference agencies. If he is currently responsible for the loan repayments and decides to not pay and even default on the loan, your chances of getting a mortgage would be nil. You will need to find a way of getting rid of this joint loan first though.

Good luck!

LivvyLoo_2

Hi,
Thank you for this advice, I earn a good wage (48,500 pa) so hopefully will be able to get a mortgage, however I agree that I should get my name off all joint accounts.

We are going to the bank on Saturday to take my name off the joint current account so all that is left is the bills account (which I control) and the loan.
We looked at his credit report and I think he was refused credit as he was at his borrowing limit (we had a caravan which hadn't come off the report when he applied), however even though the caravan has now come off (as we sold it) he still won't re-apply for a loan as he is worried he won't get a mortgage if we split and wants to pay off that loan and his own loan with his wages....he has a new job and gets a lot of money for overtime.
The problem is that he wants to pay off his own loan first (7k) and then start on the joint one.

I know once we agree to split it will turn sour so would really like it if I could afford a mortgage even with that loan taken into account. I don't expect that he will pay it off with the sale of the house for one minute!!! Even though he says that now.

Thanks for all your help, it is appreciated so much.

Million_Percent

I'm no expert but I would personally value complete financial separation above all else. Even if it meant I don't get the best or fairest deal in the split, I would try to persuade the OH to clear the joint loan with the proceeds from the house sale.

LivvyLoo_2

Hi,
Thank you for all your support. I have emailed the Financial Advisor and will let you know what his reply is.

Thanks again
LL

LivvyLoo_2

Hi all,
OK quick update on the situation.

Have been to see FA and although my situation is now worse than when I first went to see him he said that when applying for a mortgage the money for the loans comes out first and then you calculate the amount you can borrow based on your profit and wages.

I can reach the amount I would like to borrow based on my wage and paying off the joint loan in full (even though strictly speaking I shouldn't have to pay anything on the joint loan as I have paid my part off), I have a good credit rating and as the accounts OH has missed payments on are not in my name, his credit rating won't affect me. Infact it will probs be OH that can't get a mortgage even with his part of the profit!

Thank you for your time and your help and giving me the kick I needed to go and see FA.

Cornish_piskie

That's great news:)

I was in a similar position to you not so long ago, albeit with not so high a wage but a very good equity payout from the marital home, and am now happily sitting in my lovely new home with my two happy kids and hopefully mortgage-free in 7 years :cool:

Wishing you a happy future x

LivvyLoo_2

Aw thank you! I am so worried about what is to come. Its lovely to hear some happy news and to know there is light at the end of the long dark tunnel.

xx