unmarried couple, two principal residences?

nuki

Hi everyone, hopefully someone can shed some light into our situation. I would really like to get an idea if this is even possible before we go and speak with lenders and solicitors.

Me and my (unmarried) partner are currently living together but have decided to separate, as our relationship is not working anymore. We have a child together who will live with me, while he will continue to support her.

We both have good savings in our accounts and would like to buy a flat each. The problem is, my income is not that high so I can't get the mortgage I want even though I can afford it, with the aid of child maintenance. But.. the lender won't take into account child maintenance unless it's court enforced (and we don't want to go to court).

So our idea was this: buy the two flats jointly and live separately. I have about 50K in savings which would allow me to buy a flat with 85% LTV. My partner has about 40K savings which would allow him to buy a 1-br flat with about 85% LTV.

I would live in the 2-br flat with the child, he would live in the 1-br flat by himself. The 2-br would be declared as my main residence, the 1-br flat would be declared as his main residence. Mortgages would be joint on both flats. Ownership would be tenants in common on both flats, with me owning 90% on the 2-br flat, and him owning 90% of the 1-br flat. I would make all the payments on the 2-br flat (downpayment, mortgage, bills, everything etc) he would cover entirely the payments for the 1-br, so finances will be completely separate.

Is this a realistic scenario? And, would the lender treat the 2nd property as a second/buy-to-let home (because in this case one of us would have to come up with 25% downpayment for his property, which none of us has - we both have about 15% downpayment). We are hoping - because we are unmarried, we can have each a principal residence so that we escape the 75%LTV rule for BTL/second properties.

Hope this all makes sense and someone can give us some ideas.

Many thanks.

alwayspuzzled

nuki wrote: »

The problem is, my income is not that high so I can't get the mortgage I want even though I can afford it, with the aid of child maintenance. But.. the lender won't take into account child maintenance unless it's court enforced (and we don't want to go to court).

I would look into this bit further but when I spoke to the mortgage adviser at Lloyds TSB they told me they would be happy to include any child maintance, child benifit, tax credits etc as income for a remortgage application. Only proviso was that they must be able to see regular transactions for the above in my account, don't know if this is different because we were both self employed or if it was even true (been misadvised by TSB before) but worth checking before entering into a joint agreement, trust me, whats amicable now can turn sour unbelievably quickly (and isn't that oh so easy to say with hindsite)

whitewing

If you have a child together and can sit down and work out this kind of solution, why are you separating? This is a serious question.

(I think your solution is absolutely great in theory, but will be a total nightmare in reality because at some point one of you will meet somebody else and their needs will have to be added into the equation).

rpc

It sounds a nice plan, but there are at least two issues with it:

You will be jointly and severally liable for both mortgages. If your ex stops paying their mortgage, you could lose your house over it.

The first mortgage will count against you when you apply for the second, unless you go BTL which you have already flagged as a problem.

Try other mortgage lenders (or a broker) to see if they will include maintenance etc. 3 months bank statements showing it may be enough to sway some.

FBaby

I think this seems like a perfect solution on the basis of the status of your current relationship (ie, separating amicably with both the interest of your child as a priority). Unfortunately, many having gone down that route will tell you that it doesn't take much for the 'amicable' to go down the drain and for problems to come about.

One potential scenario: you ex meets a lovely girl, falls madly in love, but she lives 300 miles away and can't move because of her children. They want to move in together desperately, so he wants to sell the flat. The problem is, it is in negative equity. You get angry because he is moving miles away and clearly doesn't care about your common child, and by moving with this woman who has 5 children, the maintenance you will be getting for your child will be cut by 25%. He feels under pressure and doesn't care that you have to contribute to the solicitor fees you have to pay or your part of the negative equity.

Second scenario: He is made redundant and suddenly can't cope with the mortgage repayment. The bank starts coming after you for payments. You want to sell but he refuses. You don't pay, he doesn't pay, your credit gets blacklisted....

What might sound like a great idea at the start because it allows you to own your place could result in a completely nightmarish situation. Maybe you could go ahead with it, but try to increase your income asap so you could in a year's time or so buy each other out? Still, from my own experience (resulting in a lucky escape), I wouldn't do it.

peachyprice

There is a reason, and a very good one, why most lenders don't include maintenance as income.

You cannot insure against your ex losing his job, becoming disinclined to work, changing career, leaving the country, going to jail etc etc, a large chunk of your income is based on the whim of your ex and while it's all rosy now, there's absolutley no guarantee that it will stay that way, especially when one of you meets a new partner.

As for 2 mortgages, the pit fall as you've found is that you won't be able to have 2 residential mortages between you.

You may get some more ideas if you post over on the 'house buying' part of the forum, someone may come up with a solution you haven't yet thought of.

fluffnutter

As a rule of thumb, regardless of how amicable you still are (which is great, btw) I'd avoid being financially tied to someone I'm no longer in a relationship with. You simply don't know what will happen in the future.

I'd explore your potential mortgagee's reluctance to take into account non-court mandated child maintenance. It's income after all, and surely they just need to see evidence that this is/will be regularly paid. Have you tried a different mortgage lender?

CH27

You need to keep your financial affairs totally seperate or you could get a whole heap of trouble in the future.

Have you thought about a Shared Ownership property or just renting somewhere?

Gigervamp

Another thing to consider is that if he's only getting a 1 bedroomed place, where is your child going to sleep when she's at her dads?

burnoutbabe

if you haven't bought when you are a couple, why do you think its right to buy when 2 separate people? just rent a place for a while whilst establishing your new lives.

nuki

Thank you all! (I've actually double posted in different sections and didn't realize it).

Yes, the only concern would be liability for 2 mortgages but we were planning on doing the buy out after a year or so, to minimize the risk.

Slightly increased salary for me plus regular incoming child maintenance payments (which there are none now, as we're still under the same roof sharing expenses) would be sufficient to put me in a buy out position.

We owned property together before but we sold it because we moved to a different country.

As for why we are separating and are willing to consider that kind of solution, the short answer is - we tried but it didn't work out. We love our child and want her to live in a good area, go to a good school but most importantly have both parents close by.