HELP! I am completely stuck.

MrsElvisP

I have a joint mortgage with my ex-husband. It is an Interest Only mortgage with £147,000 as a redemption figure. The current value is £130,000.

He has no lending facility as well as a load of CCJs and no savings. I have good credit but do not earn enough to take over the mortgage on my own. To add to this, the current lender is no longer lending.

I have asked if the lender would receive my half of the shortfall and then legally discharge me from the mortgage and chase him for his half. They have said no and that I will be liable until all monies are redeemed. He has nothing to lose! I have everything.

I have now met a new partner and would like to be on a mortgage with him and cut all ties with my past. I don't know what I can do as cannot take a new product on my own, my ex cannot either and the loss of the sale of the house would be nearly £20,000. I would take £10,000 on the chin to get out of this situation but my ex has now means of paying his half of the short fall.

I really, really need some help, advice and suggestions as I am at my wits end. The only positive is that it is a strong rental house and could be let within 2 weeks with clear profit of over £200 per month.

handytips

I would suggest the rental of the property may be the only option for you, i assume that your lender was one of the sub prime lenders such as SPML. However you are caught between a rock and a hardplace here as if you sell you are still well short, especially when your ex is going to have to agree to sell the property and help make up the shortfall. I think you are going to have to wait until property prices improve.

kingstreet

How about asking your lender to allow a transfer of equity to remove your ex-husband and include your new partner.

I know the property is in negative equity but if you need somewhere to live it is possible you could see out the time there until the level of the mortgage falls back to the same level as the property value.

This would mean converting your mortgage to repayment as you're going to have to address the actual repayment of the mortgage capital sooner or later.

You'd be rid of your ex and could move on with your lives...

MrsElvisP

Can't live in house as it's in one part of the country and new partner and new life in another....

If my new partner did "buy out" ex, will this affect his ability to get a residential mortgage? Will I be able to have another with him? I don't mind keeping the house as it could make us money on the right product. But the priority is for us to have a home in London, where property is not cheap anyway!!

Many thanks :-)

holly_hobby

All mortgagors (borrowers) are jointly and severally (singularly) responsible for the repayment of the mortgage.


You are not earning enough to service the mortgage on its own, and your partner is unable to buy you out, as he has adverse credit.


You want to go onto a new mortgage with your new partner.


Option 1 sell the property and take the loss.


Option 2 rent the property (seek lenders consent to let - which may not be given due to the neg equity situ), and then seek a let to buy mortgage with your new partner.


A let to buy mortgage is effectively where the applicant is moving from the main residence (which they will rent), and seeking a new mortgage on their main residence.


The let to buy mortgage is secured on your new main residence, and based on your (and other applicants) income & satisfactory status checks, with the existing mortgage (on the let property) effectively ignored.

The let to buy lender may want evidence of the property being let, and that you have sought permission from your existing lender, or have secured a BTL mortgage (but sometimes they don't bother - as long as you have satisifed their own status checks).

Of course you will also need a deposit equal to the new lenders requirements - absolute min will be 10%.


With regards to the property to be let - just ensure that this is a workable option - there are lots of fees & problems to consider with a let property, and although his may seem like a great option at this present time and can be a rewarding experience - it can also quickly turn into a living nightmare - so do your homework on achieveable rents, market conditions for securing a tenant, how you will find a tenant i.e will you use a letting agent to manage the let for you .. etc.. etc..


You also need to consider how you will service the mge on the let property, if there are periods of unoccupancy i.e no tenant, how long will you be able to pay the 2 mortgages before something has to give ?


Notwithstanding the above, I would suggest speaking to a whole of market broker, whom will be able to source the most suitable let to buy mortgage lender, and product for your requirements. There may be a fee for their service, but I think it may be well spent in your circs, with you not only receiving advice on the best lender, but their support throughout the whole application process.


Once you have some guidance on what your new mortgage will cost, you can look at the figs and decide what you will do with property no1 ?


Good luck ...


Hope this helps

Holly

kingstreet

MrsElvisP wrote: »

Can't live in house as it's in one part of the country and new partner and new life in another....

If my new partner did "buy out" ex, will this affect his ability to get a residential mortgage? Will I be able to have another with him? I don't mind keeping the house as it could make us money on the right product. But the priority is for us to have a home in London, where property is not cheap anyway!!

Many thanks :-)

That idea's not likely to work then. You didn't mention this need to relocate in your opening post. If you add your new partner and then requested consent to let, you'd need a deposit for the next property (at least 10%, possibly more) and you'd need enough income to be able to pay both mortgages if the first property was unlet for any length of time.

A face to face with a good whole market broker may be beneficial to you to see if this could work.

Was typing this while H was posting the above...

MrsElvisP

Thank you everyone for their advice. It has definitely been beneficial getting on here and seeking other people's opinions as it's such a headache with so many complicating factors.

There are several options, as you say, and all are going to cost!

I guess ultimately, I would love to get rid of the house and would take a loss of £10,000 but cannot afford to take nearly £20,000 and why should I when my ex can walk away?! It seems ridiculous that there is no legal resolution to this taking into account I am offering to clear my half of the shortfall and allow them to chase him and his credit status for his half. Is there no possibility of this? Even with a court order for perhaps an Order for Sale etc.

My new partner earns considerably more than me; so is it the case that he could well buy a new property on his own? Without me being on the mortgage? Or can a couple borrow more with a joint income?

Many thanks

holly_hobby

Unfortuantely, when you entered into the mge contract you both agreed to maintain the whole mge. So whilst I certainly appreciate the unfairness - legally from the lenders perspective, its water tight.


An order of sale would be a respossession order - in that case the property will be sold on the open market by the lenders representativers - it may be a larger loss than 20k, again you will both be chased for the shortfall (up to 12 yrs on a mortgage debt).


Whether you can come to personal arrangement with your ex - which could be legally drawn up is a matter between the 2 of you.


I have given an alternative to purchase with your new partner - either jointly or on your own - speak to a broker for assistance.


I have to be honest - if I were in this position I would just get out and put it down to a bad day at the office ...


Sorry ...


I wish you well ..

Holly x