Mortgage and deeds question

Mojisola

happy_witch wrote: »

I had a house before he moved in with quite a lot of equity.

We needed to use the equity to buy our new family home. We did a buy to let on (my) home in order to purchase the new house.

He had to go onto the deeds of my home. We jointly bought the new house. We are both joint owners on both properties.

My old house is a buy to let which pays for itself. He has agreed I can have it back in order for me to keep renting it out for a bit of income for me.

Our new house has to go on the market as he wants to move out of the area. There is about £60k equity in this house. There is no equity in the buy to let house. I would like to release him from the deeds of the buy to let - he wants to be released too. I earn only £12k a year.

How long have you been married? The length of the relationship can affect how the assets are divided up. You don't mention children - do you have any?

Before the relationship you had a property with a lot of equity - now you're breaking up, he is happy for you to keep the rental which is in negative equity and wants half of the equity from the family house. Isn't that equity only there because you put the money in from the other sale? I think you need a good solicitor.

holly_hobby

happy_witch wrote: »

At the moment, the tenants pay him and he keeps the money - presumably so when they need stuff done, he will arrange it

How lovely for him !! Sounds as if you have separate accounts ? Where is the excess £300 going - do you benefit from it ?

happy_witch wrote: »

Our family home is going on the market, there is appprox £60k equity, if we split it 50/50 (this is all hypothetical you realise) I would pay my 50% off the btl therefore reducing it to £76,000. And either carry on with the btl or remortgaging and me moving back in there.

As part of the divorce settlement, if you have dependant children the Judge may rule that you may remain in the property (until 18), with him paying the mge for the benefit of his children retaining their home until the youngest is of age. So you finding a new home may not be an immediate requirement of the divorce.

If there is no dependant issue, then use the equity may be split 50/50 or however you agree (or the court awards if an agreement can't be met).

If you move back into the property this, as I stated in an earlier post, will have to be transferred to a residential mge, with you meeting the criteria as reqd of the lender.

happy_witch wrote: »

The fly in the ointment is, I would not get a mortgage for £76,000. I only earn about £12000 a year.

Yes, at a mulitple in excess of 5 x income that will be sticky.

happy_witch wrote: »

I suppose you have given me a bit of hope that we can have a document drawn up

Yes pre divorce settlement you could do this as stated earlier, the divorce hearing itself will apportion assets, liability etc

happy_witch wrote: »

- he is happy to hand that house back to me (it was mine originally) especially as it is in negative equity.

I bet he is, wonder if there was free equity he would be quite so generous

happy_witch wrote: »

Would I be able to get a mortgage if I had a guarantor? Thank you so much for taking the time to reply, I really appreciate it. Thank you. x

A guarantor mge would not be suitable to your circs for several reasons.

My advice is to go and see a family law solicitor on this - do not agree anything with your husband until you have sounded out the legal entitlement you have, and what the sol thinks they can achieve for you in court.

Hope this helps

Holly

antrobus

happy_witch wrote: »

...is it possible that we have a legal document drawn up releasing him for any interest in the property, even though his name is still on the mortgage?

Yes.

Whether or not your ex is listed as the legal owner of the property on the LR is neither here nor there really; you can buy out his beneficial interest for a £1. But it's entirely up to the WBS whether or not they are willing to release him from liability for the mortgage.

Normally what happens in divorce cases is that the party taking on the property agrees to use their 'best endeavours' to assume full liability for the mortgage debt and agrees to indemnify their former partner against any claim the lender might make against them in future. Whilst you are, of course, perfectly free to get divorced, and make those arrangements, and so long as you personally keep up the mortgage payments there's nothing much the WBS can or will do about it.

happy_witch wrote: »

...
maybe I could move back in and remortgage, though I hardly earn anything - I just don't know.

Well if you moved back in, you would (very probably) need to remortgage, and you might not be able to.

bowlhead99

The fact that the let property is in negative equity completely changes the game imo.

He has "agreed to you having this back" and wants to be taken off it, sounds nice and reasonable and generous - until you realise it is a net liability not an asset and this kind offer to you would avoid him having to pay back his fair share of the debt.

Instead he is thinking that he gets away without a liability or a headache, while you have to continue generating income from it, paying taxes on the income, maintaining the property and investing all net income into paying off mortgage principal for some unspecified future period for the asset to even be worth zero. Think very very carefully about this when you are talking about having it handed back to you "because it was originally yours and it will be a good thing to have back".

Now, I get that a property with 100% mortgage or even 103% mortgage is not necessarily worth zero, if it is able to generate a monthly profit after running costs and mortgage interest and taxes. But as you have discovered, no lender will likely be happy to lend you 100%+ for you to own such a property alone when you don't have sufficient spare from your own salary to cover empty periods, serious repairs / renovations / preventative maintenance etc.

You are only currently able to have the ability to owe 106k against it because of historic circumstances. If you did find a lender it would be high risk and you could be bankrupted, so don't be fooled that it is free monthly money just because it has worked out OK to date.

If you were to try the residential route after putting your 30k into it, you would be seeking a 70-80% mortgage (depending on its actual value). Over 6x income at this loan-to-value and your salary level is hard to find from mainstream lenders.

So your issue is your 300pm income stream does not exist if you take him out of the picture. If you keep him on the mortgage with all the risk that involves, he would be crazy to let you keep the income or live in the house rent free (unless by doing this there's something awesome in the divorce settlement for him, like he gets to keep an expensive car or an extra slice of savings or investments or whatever which he would have otherwise had to split with you).

I think the only practical options are likely to be
- sell the let property (paying off neg equity with the proceeds from the family house);
- keep it held in joint ownership with 50% of the rental income and operating expenses being kept by each of you.

If I was the husband I would not go for the second option, because 150 a month potential income is simply not worth it for the risk that comes with jointly owing over 100k with an ex-wife who has limited resources to help maintain the property or make good any rental shortfalls, no experience of looking after tenants etc, and I've moved out of the area so can't as easily look after it like I used to.

Sorry if this wasn't what you were hoping to hear, but hopefully gives you some perspective.

holly_hobby

Good post bowl

H

happy_witch

Mojisola wrote: »

How long have you been married? The length of the relationship can affect how the assets are divided up. You don't mention children - do you have any?

Before the relationship you had a property with a lot of equity - now you're breaking up, he is happy for you to keep the rental which is in negative equity and wants half of the equity from the family house. Isn't that equity only there because you put the money in from the other sale? I think you need a good solicitor.

Together 5 years, then married 5 years - total 10 years together. No children. Yes to your question about equity in family home because equity taken out of my original home which is now a btl.

happy_witch

holly_hobby wrote: »

How lovely for him !! Sounds as if you have separate accounts ? Where is the excess £300 going - do you benefit from it ?

No paid to him in cash - no separate accounts, in fact our joint salaries still go into a joint account, and all bills still come out of it. We only separated 2 months ago and everything is so raw. No debts except mortgage, but he keeps all the cash from rental property.....



As part of the divorce settlement, if you have dependant children the Judge may rule that you may remain in the property (until 18), with him paying the mge for the benefit of his children retaining their home until the youngest is of age. So you finding a new home may not be an immediate requirement of the divorce.

If there is no dependant issue, then use the equity may be split 50/50 or however you agree (or the court awards if an agreement can't be met).

If you move back into the property this, as I stated in an earlier post, will have to be transferred to a residential mge, with you meeting the criteria as reqd of the lender.



Yes, at a mulitple in excess of 5 x income that will be sticky.

Yes pre divorce settlement you could do this as stated earlier, the divorce hearing itself will apportion assets, liability etc



I bet he is, wonder if there was free equity he would be quite so generous



A guarantor mge would not be suitable to your circs for several reasons.

My advice is to go and see a family law solicitor on this - do not agree anything with your husband until you have sounded out the legal entitlement you have, and what the sol thinks they can achieve for you in court.

Hope this helps

Holly

Thank you.

Mojisola

happy_witch wrote: »

Together 5 years, then married 5 years - total 10 years together.

A 5 year marriage probably wouldn't count as a short one where you would expect to return to your pre-marriage financial status so you're looking at a 50/50 split. Remember that's 50% of the debts (negative equity) as well as 50% of the money.

happy_witch

Mojisola wrote: »

A 5 year marriage probably wouldn't count as a short one where you would expect to return to your pre-marriage financial status so you're looking at a 50/50 split. Remember that's 50% of the debts (negative equity) as well as 50% of the money.

Can I throw something else into the ring? which I didn't mention as I didn't want to complicate things. The btl house was bought by me from the council and I had a £24,000 discount. When we took the equity from this house (£40k) out in order to purchase our family home, we had a document drawn up by our solicitor to say the first £24,000 of the sale (of the family home) would be mine and the rest divided 50/50. We were married 5 years ago and bought the family home 4 and a half years ago. I am not sure if this would stand now - husband says it wouldn't. What a horrible mess. Thank you for your reply. x

Thrugelmir

happy_witch wrote: »

Can I throw something else into the ring? which I didn't mention as I didn't want to complicate things. The btl house was bought by me from the council and I had a £24,000 discount. When we took the equity from this house (£40k) out in order to purchase our family home, we had a document drawn up by our solicitor to say the first £24,000 of the sale (of the family home) would be mine and the rest divided 50/50. We were married 5 years ago and bought the family home 4 and a half years ago. I am not sure if this would stand now - husband says it wouldn't. What a horrible mess. Thank you for your reply. x

Providing your have the document, still very much valid. Suggest you pass to your solicitor for safe keeping.