Please Help! I need advice.

Roma.10

Not sure i've posted in the right place but i would appreciate some advice please...

My girlfriend has just decided she wants to leave me after 7 years for reasons i am still trying to get my head around.

Problem is we have been in our first house for 18 months now and if i am to lose her i don't want to lose everything and want to do all i can to keep the house.

We both bought our house for £160,000 with a 100% mortgage of £80,000 each. Repayments at the moment are around £400 each a month.

Sale price now would be around the £195,000 to £200,000. Lets say £200,000 to keep the numbers simple.
Would she be entitled to release her £20,000 equity on this?
If she was, i would then have to take on the full £160,000 plus £20,000 = £180,000 mortgage. I would have repayments of £1000 a month which i just cannot afford. Is this correct?

If so does anyone have any advice on the best way to go about things. i.e lodgers etc. It is a nice 3 bedroom house in a great area so i could take on 2 lodgers max i suppose.

Thanks in advance.

Mr_helpful

You could leave first then she would have to pay you.

Roma.10

I could. But i don't want to. It's my house too.

And £20,000 would be no good to me to move on.

Not to buy again in the area i'm in.

lightspeed

Hi

I have recently found myself in a similar situation albeit a slightly smaller mortgage (140K). The difference for me is that myself and my partner bought our house 12 months ago and intended to renovate the whole property (probably what killed the relationship, lol). We got 80% through and she decided that she had had enough and wanted out.

Having had 3 valuations almost immediately, minus fees/penalties and the fact that the house was not finished, the valuations meant that if it is sold we are likely to take a loss on our initial investment... cue solicitors and IFA.

Following several discussions with my IFA and the solicitor it is clear that my partner is entitled to half of the equity in the house (only fair due to her equal financial input). At the moment we are at a bit of a stalemate but my options are quite clear and will almost certainly apply to your situation.

1) Sell the house and split any money left over 50/50.

2) Either i buy her out or she buys me out at an agreed price based on the valuations. If as you say the property has 40K equity i dont think that it would be unreasonable for you to offer 20K minus half of the estate agent fees and redemption fees (these would be taken off the equity if the house was sold anyway, so in theory this is money that she will never see). Further to this it would probably be in her interests to cut her losses and take less than she is entitled to just to get out quickly. Then i would need to get a lodger to foot her half of the monthly costs until i get back on my feet.

You could switch to IO to lower payments (this should only be short term) or rent out a room to a lodger who is willing to come up with her monthly share.

Dont forget that this all hinges on whether the mortgage company will allow you to increase the mortgage on your salary. In my experience rental income is not counted in the multiples.

You must be realistic in what you are intending to do and not let pride rule your head as this could end up being a financial disaster if you do not have a substantial game plan.

Roma.10

I only earn £20,000 p/a.

Would i have any chance with the mortgage company in securing such a huge mortgage?

Or is this a no go situation?

Any suggestions would be appreciated...

MortgageMamma

You wont be able to borrow 160k off 20k no

Looks like you might have to sell

do yourselves a favour and try and keep the legal bods out of it as much as possible, their fee's alone will be eating away at whatever equity you have got

Rick62

Or do you have a friend who would like to buy her half?

Roma.10

The problem is all of my close friends have recently bought with their partners.

I suppose this is my only option and will have to ask around the rest of my mates - although it's alot to ask.

However, it wouldn't suprise me in the way she's thinking if she was plotting the same action - to have one of her friends take on half the mortgage.

If this was the case then where would we stand then?
Would it be something we'd have to sort out between us or would one person have any more legal rights????

Poppy9

If the house is worth £200k then you should take account the costs you would incur if you sold through an agent before deciding what her share of equity is.

You have a few options.

1. Ask her to continue paying her share of the mortgage to retain a foot on the property ladder. You then take in a lodger and they pay the rent to her directly to offset her mortgage payments. She would have to continue to contribute to property maintenance.
2. Approach the bank to remortgage as a buy to let and take in lodgers. First check if there is a market for lodgers, how much they would pay per month etc.
3. Sell up and buy a smaller place on your own.

Rick62

Roma.10 wrote: »

However, it wouldn't suprise me in the way she's thinking if she was plotting the same action - to have one of her friends take on half the mortgage.

If this was the case then where would we stand then?
Would it be something we'd have to sort out between us or would one person have any more legal rights????

First thing is, do not leave the property! If she wants to leave you then if she leaves the property you are in the stronger position (although I don't know the law). If she wants to buy you out, and you want to buy her out, I guess it comes down to who offers the most money.

One buying the other out is better than selling, as you avoid all the costs, stamp duty, agents, etc (early repayment charges on the mortgage?) which could easily be £7-8K and same again if you have ERCs.

silvercar

If neither of you can afford the mortgage and upkeep of the house alone, the logical thing to do is sell up. Both of you then gain a small amount of equity to start again with and you have a clean break.