Moving in with my partner - will my IVA affect her?

thinkpositive1

I am soon to move in with my girlfriend and wanted some advice on 2 key issues.

I am nearing the end of year 2 of my IVA. She is financially independent, has her own house and mortgage in her name only. She has no blemishes on her credit records and I don't want my IVA to impact on her detrimentally. She knows my situation fully and my thoughts are we keep our financial affairs (accounts) separate but I will contribute some cash each month.

I know people say that credit records are based upon the individual but they also search by property / address too and I am seeking assurances that my IVA will not scupper her chances with any future financial applications she makes. We are likely to get married before my IVA is complete and whilst we are unlikely to make a joint mortgage application until my credit record is "cleared up", I fear for how this will affect her records. Am I worrying unduly?

Also, I will be renting out my house. I am in negative equity so there is no point selling it yet (and in the longer term it will be my only real asset so I want to hang onto it and this seems the best plan). I am advised that I should tell my mortgage lender if I am going to rent out my house. However I am worried they might not endorse this. Do mortgage lenders have powers to prevent the mortgagee letting out the property? Again am I worrying unduly or should I say nothing to them? I would prefer to be open and honest with the mortgage lender but I don't want them to pull the plug on me renting it out - if for whatever reason they can do this.

Anyone able to comment?

missile

With an IVA, I think it unlikely that your lender would give consent to let and I would caution against doing it without.

I would suggest you do your sums carefully. There are many costs assosciated with being a LL. How would you cope if the tenant did not pay the rent, trashed the property and you had to raise a court action to evict.

As you are in negative equity, it is not an "asset" but a liability and your best plan might be to sell the property.

Hate to pour cold water on your plan, but please think carefully.

19lottie82

Hi - If you are in negative equity then it is very unlikely that your lender will grant you consent to let.

And, no they don't have the power to prevent you letting out your house, however, they do have the power to cancel your mortgage agreement, or hit you with a load of charges.

A lot of people do let without consent, but obviously this comes with risks. if you are going to consider this, please make sure that you are aware of them.

back to the original question. you can keep your finances seperate as long as you don't have ANY joint accounts, this includes mortgages too I'm afraid.

thinkpositive1

Thanks. I had hoped the mortgage issue would not be a problem. I had feared this but do not understand why they would not give consent to let - especially as I am in an IVA - on the basis that it would give me additional income that will help give some strength to my financial situation. Isn't that helpful to both me and them? I don't get why it would be a problem from their perspective.

I don't know how to get a definite advice on what their take on this would be without contacting them and potentially blowing my cover, so to speak.

As for the asset v liability issue Missile, I understand what you are saying but if I sell now then I have to find some £30K or more to pay off the mortgage lender don't I? And that makes no sense at all. If I rent it out, at least over time, I will move out of negative equity and it will be an asset then.

thinkpositive1

19lottie82 wrote: »

you can keep your finances seperate as long as you don't have ANY joint accounts, this includes mortgages too I'm afraid.

Thanks - but will me living at the same address and, in the not too distant future, being her husband - is that going to impact on her credit file / score even if we keep all accounts separate, which we plan to until I am out of my IVA and my credit file is "good" again.?

19lottie82

thinkpositive1 wrote: »

Thanks - but will me living at the same address and, in the not too distant future, being her husband - is that going to impact on her credit file / score even if we keep all accounts separate, which we plan to until I am out of my IVA and my credit file is "good" again.?

No, as long as you make sure you don't have ANY joint accounts at all, examples include, mortgages, tenancy agreements, bank accounts, credit cards, virgin / sky and possibly utilities (im sure someone said the latter wouldn't effect anything, but I wouldn't risk it)

UpToMyNeckInIt

Hi thinkpositive,

Don't agree with some of the advice here, I think you need a chat with your IP.

I've got a second property and let it out whilst in an IVA - no problem. It generates a net income, which in turn ups my affordability figure for the IVA.

Surely if you move in with your partner and rent out your place (negative equity has nothing to do with it), that will generate an extra income, 50% of which you will probably have to pay into the plan, but you get to keep the rest. Can't see anyone having a problem with that.

Only issue might be if the rent does not cover the int. only mortgage payment, generating a net loss.

Best of luck, and let us know how you get on.

UpToMyNeckInIt

Actually, just thought - might be v. difficult to arrange a buy-to-let mortgage if you wanted to let long-term.

thinkpositive1

UpToMyNeckInIt wrote: »

Only issue might be if the rent does not cover the int. only mortgage payment, generating a net loss.

Best of luck, and let us know how you get on.

Hi and thanks for the comments. I am not sure why the rent would need to cover the interest only part of the mortgage? I have had a couple of letting agencies over and both gave a monthly incme fugure which is around half my mortgage. As I am having to pay the m/g now in any case and will do in the future then the rental income I would gain all additional anyway. The only thing (from a monthly budget plan) I would then net off is a contribution as a "rent" I pay to my girlfriend.

Letting my house and moving in with my other half can only be a good thing financially for her and me - she gets rental income and a contribution to utlility bills from me and I get additional income from whatever rent I get out of which I can pay her some living costs.

I won't have my own council tax, water, gas, elec to pay anymore (more savings) and shared food costs etc. will all mean a win-win situation as far as I can see.

More likely to keep on top of mg payments and my IVA so I can't see the problem but I fear this "consent to let" issue may be a problem - although I don't see why it should

milliemonster

When you move in with your partner, although she won't be affected by the IVA as such, your IP will want to do a review of your I&E and will expect your contribution towards your new household income to be in proportion with her salary.

So for instance, if you earned £2000 a month and she earns £1000 a month and the total new household bills come to £800 a month, you would be expected to contribute twice as much towards the bills are your partner (as you earn twice the income), on top of that you are still going to have to meet your other mortgage payments. I doubt that your IP would allow you to continue to foot the cost of your other mortgage, plus pay rent on top to your new living arrangements. I understand what you are saying about that you would be paying your mortgage anyway, but you wouldn't be paying rent on somewhere else if you were still living there like you are going to be when you move in with your new partner.

You need to speak to your IP and go through all your sums before you take the leap. There may be a way around it but only they know your circumstances

jungle_jane

When i applied for a consent to let, the rental income had to be 125% of the mortgage payments. They charged a hefty one off fee admin fee too.

Don't forget you also have to pay tax on any profits you make over and above the mortgage interest too.