House purchase question

Mods

FBaby wrote: »

But from your previous posts it is quite clear that this was never the agreed arrangement since the house has been on the market since he left the property. The fact that the house hasn't sold in 6 years is more a failure on your partner than her ex since she had more control over the presentation of the house/dealing with viewing etc... Surely the matter of the house not selling should have been tackled much sooner. I assume her ex didn't because indeed, he had less to lose, but I don't understand why your partner let in on for all this time, unless she realised that being able to stay in the house was not such a bad thing.

I still don't think it is fair to expect him to get less of a return because the house hasn't sold in all this time.

My partner has dealt with this always in a way that serves her children's best interests, in this case staying in the same house where they can go to a school where they are happy. She deserves all the credit for how she has raised the kids so far and continues to do so. She has always made every effort in the presentation of the house with limited resources and incentives to do so all whilst giving up her already squeezed time for viewings etc. The notion that this is her fault somehow is absurd. I concede however, that the house issue should have been dealt with much sooner but as previously stated my partner rightfully always acts in the best interests of the children.


I am not at all concerned about what is fair for her ex partner. I am merely interested in what our options are preferably with regards to either buying him out (in which case, buying him out at the lowest possible cost).

Can anyone advise what my lowest and max bid might be based on the rough figures I provided in my OP? Perhaps a silly question but it all helps! Does anyone at least know how best to go about getting things going with this (i.e. should the next step by valuations, mediation to discuss sale, etc)?

daska

FBaby wrote: »

But from your previous posts it is quite clear that this was never the agreed arrangement since the house has been on the market since he left the property. The fact that the house hasn't sold in 6 years is more a failure on your partner than her ex since she had more control over the presentation of the house/dealing with viewing etc... Surely the matter of the house not selling should have been tackled much sooner. I assume her ex didn't because indeed, he had less to lose, but I don't understand why your partner let in on for all this time, unless she realised that being able to stay in the house was not such a bad thing.

I still don't think it is fair to expect him to get less of a return because the house hasn't sold in all this time.

If you read her threads it makes sense

Mods

FBaby wrote: »

Option 3 is very dangerous. If he owns anothe house, he won't be able to afford paying the full mortgage of the joint property and it is highly unlikely his wife will want to move there. Most likely, he will default and give both himself and your partner bad credit. This might have a bigger impact on her if you then want to buy something together. It might be more a possibility if he is only renting, but again, it's a massive big risk to take that could backfire badly.

Option 1 is from far the best option. The 50/50 equity is not massive money (I know everything is relative!!!), but it means that fighting a 40/60, even 30/70 which would be really hard to argue is not going to change your life positively as choosing option 3 could potentially change your life in a very negative way. Better to lose a few thousands, than risking a bad credit record and not being able to afford another property for a long time.

Thanks for both your responses by the way, Fbaby. Very helpful indeed.

Mods

daska wrote: »

If you read her threads it makes sense

:T

Exactly.

Fire_Fox

Mods wrote: »

The ex will argue he's paying for a roof over their heads but hear me out. Let's say that house prices remain the same for the next ten years or increase, and in 2022 when my youngest step daughter is 18 the house sells. He would effectively make a return on the money he's 'paying to keep roof over their heads'.

275 x 12 x 10= 33,000 (This is how much child maintenance he would be paying for the two kids over the next ten years as things stand).
The house is currently on market for £129k. Let's say it sells at that price in 2022 with no mortgage left to pay with both my partner and him entitled to 50% of the equity....see where I'm going with this? Of course, I maybe way off the mark here but that's why I posted on these forums; to gain insight.

Everyone already understands you but your logic is based on a hypothetical property market and hypothetical timeframe not the real one. For a start the price has not stayed the same or increased and is highly unlikely to do so before you sell or transfer providing you set a realistic value.

Mortgage payments have two parts: paying off the capital (small) = investment, and the interest (large) that you don't ever get back, it's akin to the ex renting the house for his children from the bank = maintenance. On top there is either an increase or decrease in value = equity, so a good return on the investment OR a poor return on the investment. The amount of interest paid (= maintenance) does NOT relate to the increase in equity, they are two independent issues. Your maths erroneously equates the two.

Do bear in mind in the scenario you propose the father might make a return on the property he doesn't live in BUT he also has no equity and perhaps cannot get another mortgage. His £15K equity on day one has a far lower value ten years on due to inflation so his 'share' needs to be a percentage. This uncertainty of this issue is why solicitors like to agree the division of equity soon after the split even if the property is not sold immediately.

daska

FBaby is right, Option 1 is the best of the 3. You really shouldn't go down the road of wrecking her credit rating - though yours would remain intact if you aren't financially linked.

As to a figure to offer, that would have to take into account the current valuation, it would unfair to base it on the theoretical equity of the purchase date. Also that for the last 6 years your fiance has presumably paid all the running/maintenance costs/overheads which he would have been liable for if he were living there i.e. insurance, council tax, standing charges etc. Also that she has had no contribution to the costs of supporting their children in terms of child maintenance. (I know legally it's a minefield but morally my stance is that he can't have it both ways, either it's maintenance that belongs to the RP or it's an investment that he gets a return on.) On that basis I think I'd go in at under 50% of the remaining equity. Which you might be able to decide depending on what you think he might be earning and therefore have been liable for in terms of maintenance.

Bear in mind that you can always increase an offer far more easily than you can reduce it.

FBaby

Sorry if it came across that I thought it was her fault the house hadn't sold, it wasn't my intention, just that she had more control over trying to help it happen. 6 years is a very very long time to let a house not sell.

I understand that you don't care about what is fair to her ex, but to reach some kind of resolution, you won't be able to ignore fairness because anything unfair will inevitably come with him not agreeing and therefore going nowhere.

The way he probably sees it is that as much as your partner has been an excellent mum and insuring the best for her kids, he has insured that they remain in the house and local schools by continuing to pay half the mortgage, which most likely meant some sacrifices on his side. On this basis, he probably considers he is entitled to his half.

This uncertainty of this issue is why solicitors like to agree the division of equity soon after the split even if the property is not sold immediately.

And if that had happened, he might have been entitled to a lot more equity on the basis of the value of the house at the time of the separation. But it didn't happen and therefore he can't use this as an arguement for more equity than half of the current value.

I really do think taking the current situation, the need to come to a resolution, and all the 'what ifs', into consideration a release of 50% of the current equity is the best move forward.

daska

oh yes, and get more valuations, obviously the current agent has it too highly priced - 6 years is a very long time for no one to make an offer! (Either that or your fiance hasn't been presenting the house to best effect - difficult with young children I appreciate.) Ask at least 3 agents to estimate for both best price and quick sale. Have any similar local houses sold recently, if you can get details of purchase prices on them it might help.

Mods

Fire_Fox wrote: »

Everyone already understands you but your logic is based on a hypothetical property market and hypothetical timeframe not the real one. For a start the price has not stayed the same or increased and is highly unlikely to do so before you sell or transfer providing you set a realistic value.

Mortgage payments have two parts: paying off the capital (small) = investment, and the interest (large) that you don't ever get back, it's akin to the ex renting the house for his children from the bank = maintenance. On top there is either an increase or decrease in value = equity, so a good return on the investment OR a poor return on the investment. The amount of interest paid (= maintenance) does NOT relate to the increase in equity, they are two independent issues. Your maths erroneously equates the two.

Do bear in mind in the scenario you propose the father might make a return on the property he doesn't live in BUT he also has no equity and perhaps cannot get another mortgage. His £15K equity on day one has a far lower value ten years on due to inflation so his 'share' needs to be a percentage. This uncertainty of this issue is why solicitors like to agree the division of equity soon after the split even if the property is not sold immediately.

Thanks. Of course, I was aware of how a repayment mortgage works but I guess I hadn't considered that in relation to the maintenance issue. I'm not sure you're right (or wrong for that matter) in looking at it this way but I appreciate the different perspective.

Mods

daska wrote: »

FBaby is right, Option 1 is the best of the 3. You really shouldn't go down the road of wrecking her credit rating - though yours would remain intact if you aren't financially linked.

As to a figure to offer, that would have to take into account the current valuation, it would unfair to base it on the theoretical equity of the purchase date. Also that for the last 6 years your fiance has presumably paid all the running/maintenance costs/overheads which he would have been liable for if he were living there i.e. insurance, council tax, standing charges etc. Also that she has had no contribution to the costs of supporting their children in terms of child maintenance. (I know legally it's a minefield but morally my stance is that he can't have it both ways, either it's maintenance that belongs to the RP or it's an investment that he gets a return on.) On that basis I think I'd go in at under 50% of the remaining equity. Which you might be able to decide depending on what you think he might be earning and therefore liable in terms of maintanence.
Bear in mind that you can always increase an offer far more easily than you can reduce it.

I'm glad you're seeing this like I am, Daska. Thanks. I definitely think the child maintenance aspect of this needs to be cleared up and I agree that my partner needs to argue a greater share (or we need to reduce our buy out bid) as she has paid the costs for maintaining the home you mentioned. I certainly plan to go in low with any bid.