Mortgage Application while on mortgage with Ex-Wife

drc200

Hi, I divorced from my wife in 2009, She lives in the FMH paying the mortgage (95k) interest only, I have a legal charge on the property which ,means she will have to sell when our youngest reaches 18. I then get my share of the equity.

My partner and I both work although I earn a little more than her. Most mortgage companies see our proposed mortgage as being unaffordable due to existing mortgage.

I would like to apply for a mortgage with my new partner. We are very limited because all the lenders we have looked at (obviously) take into account my existing borrowing even though I dont pay towards it.

Does anyone out there know of ANY means possible to increase the amount I can borrow? It has been suggested I could get insurance to cover my ex wife defaulting, does anyone know of such a policy? then would a lender even accept this?

I have got over the feeling of having nothing and starting again, only to be thrust right back down there, now I would like to get back on the property ladder.

kingstreet

drc200 wrote: »

all the lenders we have looked at (obviously) take into account my existing borrowing

Can you explain what you mean by this?

Are they taking the mortgage amount off your borrowing power, or are they deducting the possible cost of the mortgage from your income before multiplying it out?

For example, the monthly cost of a £95k mortgage at 5%pa is £395 per month. Deducting that from your income (similar to any other credit commitment) before multiplying out your income to calculate your borrowing power would impact on you by around £19,000 if the lender offers 4x income.

This would obviously impact on you less than a lender deducting £95k (the mortgage amount) from what you can borrow.

Different lenders take these two different approaches. Can you feedback who you've spoken to and what approach was taken?

IMHO, the ones which treat your liability as a credit commitment are the best you can hope for and this will be subject to the loan to value of the new mortgage.

Dave_Ham

Hi there, without knowing more it is virtually impossible to suggest whether this is practical or not.

A broker is likely to be your best bet, as we can piece together more complex cases like this knowing the criteria of each of the many lenders.

If you want to post income for you both, monthly financial commitment (mortgage cost) on the current mortgage and any other financial commitments (credit cards etc.) we may be able to give you a general steer of if likely...

AMILLIONDOLLARS

drc200 wrote: »

Hi, I divorced from my wife in 2009, She lives in the FMH paying the mortgage (95k) interest only, I have a legal charge on the property which ,means she will have to sell when our youngest reaches 18. I then get my share of the equity.

My partner and I both work although I earn a little more than her. Most mortgage companies see our proposed mortgage as being unaffordable due to existing mortgage.

I would like to apply for a mortgage with my new partner. We are very limited because all the lenders we have looked at (obviously) take into account my existing borrowing even though I dont pay towards it.

Does anyone out there know of ANY means possible to increase the amount I can borrow? It has been suggested I could get insurance to cover my ex wife defaulting, does anyone know of such a policy? then would a lender even accept this?

I have got over the feeling of having nothing and starting again, only to be thrust right back down there, now I would like to get back on the property ladder.

If you don't pay toward the mortgage, then surely your share will be considerable reduced when the time comes. Wasnt there a case in the papers (Daily Mail) last year when someone lost out because he didn't help with the payments!

AMD

DVardysShadow

AMILLIONDOLLARS wrote: »

If you don't pay toward the mortgage, then surely your share will be considerable reduced when the time comes. Wasnt there a case in the papers (Daily Mail) last year when someone lost out because he didn't help with the payments!

AMD

As I see it, OP does not have any share in the house represented by the 95000 of mortgage if he does not pay it. But not paying towards that mortgage should not reduce his share of any equity decided to be his at the time of separation unless he defaults on maintenance of course.

Thrugelmir

drc200 wrote: »

We are very limited because all the lenders we have looked at (obviously) take into account my existing borrowing even though I dont pay towards it.

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Whether you pay or not has no relevance. In the event of default you would be liable that's the key.

Made worse by the fact the mortgage is interest only. So the capital balance owed remains static.