Loan attached to Mortgage - what now Ive moved out?

MerseyLad

Hi,

Myself and my partner bought a house 5/6 months ago. At the time I wanted to sort out my debts to enable it to be easier for me to manage financially. Therefore, on top of our mortgage I took out a further loan that is treated as a personal loan but is linked into the mortgage with the Coventry Building Society. The payments for the mortgage and the loan come out seperately, but I believe they are linked somehow.

Anyway, unfortunately, it looks like me and my partner will be seperating and I wanted to know where I stand with all this really. As its m debt, and I will obvioulsy be taking this on with me.

Firstly, I dont know what we will do with the house - whether my partner can afford to keep it on her own, if not we will either look to sell, or maybe rent it out????

Can I keep the loan as it stands do you think? As the monthly payment on it is quite low and therefore I would be happy with it as it is.

Or would I have to look elsewhere to consolodate it?

Also, because we are possibly selling the property so soon after taking out the mortgage, I pressume we will be penalised?

Im all very confused about this to be honest, so sorry if its very vague -if I can clear anything up to help you answer this for me, then let me know.

Thanks

Rafter

Presumably you took the mortgage in joint names, so both the mortgage and the personal loan are both of your responsibility.

I'm sure that after such a short period there might be some sort of early repayment penalty.

If you sell the house I'm not sure what they might do - It depends on how much equity is left. If the house has gone up in value then there might be enough to repay the mortgage, penalties and personal loan. You would then need to take out a personal loan to repay your partner their share of the increase.

If there is not enough to repay everything, the rest would be converted to an unsecured personal loan in joint names. You would then need to decide between you a share of responsibility to repay it.

It would be worth looking to see whether you can agree to keep the property until the end of the original scheme so you don't pay the penalty. Could you partner rent out the spare room maybe to meet your side of the mortgage?

The risk for you is that house prices don't increase or even fall and you end up losing money.

Hope that helps.

R.