Getting the ex off the mortgage

purplebiro

Thanks all. I have npow spoken to Santander who said that in order to take the ex off the mortgage I would effectively have to re-apply for the mortgage through them. They valued the property at nearer £115,000 (this is market value and - I think - doesn't reflect the fact that my house is a period property with a lot of original features and in excellent decorative condition but frankly, I don't think I'm in a position to fight it) meaning the LTV is around 96% and they basically told me not to bother - there's no way they'd get it through at that, even without the substantial drop in household income that removing the ex would incurr or my patchy credit history. Having done a brief search of othe rproducts it doesn't look like I could get a mortgage at a decent rate anywhere else either, unless I am able to bring the loan down by a substantial amount (not an option, unfortunately).

So I think, for now at least, the mortgage has to stay in both our names. TBH, I'm not too fussed and I don't think he will be either - it's more of a "drawing a line under it" that we want, really - I don't want to have any more contact with him, no matter how civil we are, and I'm sure he feels the same but it's not the end of the world if it has to stay this way. He has a new partner and I'm assumiung at some point he will want to buy a place with her but he is a very high earner (£100k+ pa) and I'm guessing he won't have too many problems if he's still named on this mortgage.

On the other hand, I wonder whether it's still worth or even possible, drawing an agreement up between us with a solicitor or IFA which effectively ends his claim on the house from now on? So basically all of my original scenario as above but his name still stays on the mortgage (and deeds? can you change the deeds but not the mortgage?) Is that even possible?

purplebiro

DVardysShadow wrote: »

No it is not a reasonable plan. For either of you. Unless you both understand the issue and accept the consequences.

You should only crystallize his share of ownership into cash at the point you pay him off. If house prices rise by the time you pay him off, he will have been deprived of that rise from the time you crystallized his share as a cash value. If they fall by the time you pay him off, you will be over paying him for his share.

Why should I not crystalise it at the point when the house is valued if, after that point, he is making no financial contribution to the house?

FCRangers

Let him buy the property?

purplebiro

FCRangers wrote: »

Let him buy the property?

Ha, he wouldn't have it. And I wouldn't want him to have it! I love my house!

Ghostrider

DVardysShadow wrote: »

No it is not a reasonable plan. For either of you. Unless you both understand the issue and accept the consequences.

You should only crystallize his share of ownership into cash at the point you pay him off. If house prices rise by the time you pay him off, he will have been deprived of that rise from the time you crystallized his share as a cash value. If they fall by the time you pay him off, you will be over paying him for his share.

This is a very good point.

What person in their right mind would ever agree to that sort of a deal that you suggest OP, would you sign up to that if you were your Ex? I know I wouldn't!

The generally accepted rule in this type of investment is that you cystalize at current market value if you want to buy somebody out of their share of the investment. I suppose he could then agree to LEND YOU the money until you can afford to repay him, but would you want to be in in debt to him?

If you want to buy him out, then you need to be in a position to buy him out first.

This is all academic anyway, because the lenders have to agree to all of the this first, and if they don't then you don't have much choice but to be in a joint mortgage with him until personal situations change or you can sell the house. It probably suits him anyway as his investment will increase with property values over time and if he doesn't need the £2.5k (or whatever it is) now, then he may as well sit on his investment.

purplebiro

I think he might, actually - baring in mind that he also stands to save some money if house prices fall after the point where we crystalise. And yes, effectively I am asking that we complete the process for buying him out but that I delay paying him the money until such time as the house sells or I have the cash to hand. It also means he isn't paying £157 mortgage a month towards a house that he doesn't live in and is unlikely to ever see a significant return on that investment.

But yes, the fact is that I can not remove him from the mortgage in name at this stage. And so I ask myself is it still worth completing the process above but keeping him named on the mortgage?

Ghostrider

purplebiro wrote: »

I think he might, actually - baring in mind that he also stands to save some money if house prices fall after the point where we crystalise. And yes, effectively I am asking that we complete the process for buying him out but that I delay paying him the money until such time as the house sells or I have the cash to hand. It also means he isn't paying £157 mortgage a month towards a house that he doesn't live in and is unlikely to ever see a significant return on that investment.

But yes, the fact is that I can not remove him from the mortgage in name at this stage. And so I ask myself is it still worth completing the process above but keeping him named on the mortgage?

Having just read your post above (apologies I didn't before) I would suggest you have no option but to hold tight to be quite honest, you're certainly not alone in this situation.

Can you end any claim he has on the property - the answer is no you can't if he is still contributing to the mortgage and still has his name on it. He would also be a bit silly if he agreed to stop paying you because he then risks losing a claim on his original deposit, any solicitor will adivse him that straight away. Besides, why on earth would he end his claim (lets assume that he can) on the property, you hand him £2.5k and he walks away. Then lets say you lost your job, couldn't pay the mortgage or decided you didn't want to, he is then still legally (no matter what agreement any solicitor draws up) on the hook for the mortgage repayments and the lender will chase him. Again, he'd be advised straight away to not do that.

Can you change the deeds, I think you can, but there is little to be gained from doing so as the mortgage company have a charge over the property, so it doesn't matter whos name is written on the deeds, you don't own them.

The best possible way out for you both is a clean break, and the only easy way to achieve that is to sell the house, take whatever costs that incurs or if you're lucky some of your deposit back and never need to deal with each other again if thats what you so wish. If you can't sell, then you'd have to carry on as you are until the time can sell. Trying to fudge anything of a halfway house normally never works and is a waste of your time and money trying to do so.

purplebiro

Thanks for this, it's really helpful to get an outside perspective. I think you're right that it's either stick or sell and at the moment, although I'd prefer to do neither stick is my best option - I love my little house and have no desire to move. Once again, I'm grateful that he's being so good and we've managed to be good to each other on the house side of things - could be so much worse.

DVardysShadow

purplebiro wrote: »

Why should I not crystalise it at the point when the house is valued if, after that point, he is making no financial contribution to the house?

Because you will still have his share of equity - on which he will make no return.

Given the circumstances, probably the best thing to do is for you to take on the whole mortgage and work out what equity he has, go for tenants in common and assign him that share.

So suppose the mortgage is 90,000 and the house is worth 100,000. This means there is 10,000 equity. His share is 2,500 so you put the house 97.5% in your name and 2.5% in his, which he gets when you sell up or buy him out.

Agreed you can't take on the mortgage or change the deeds. But you could take on the mortgage and set the property shares right now.

Ghostrider

DVardysShadow wrote: »

Given the circumstances, probably the best thing to do is for you to take on the whole mortgage and work out what equity he has, go for tenants in common and assign him that share.

So suppose the mortgage is 90,000 and the house is worth 100,000. This means there is 10,000 equity. His share is 2,500 so you put the house 97.5% in your name and 2.5% in his, which he gets when you sell up or buy him out.

No offence, but I think thats a waste of money surely, what benefit does that give anybody? He doens't get paid out, he still has the risk of being on the mortgage and the OP has to spend money to achieve it and still has her Ex in the picture.