Divorcing and Mortgages

jsaver

I am looking for some wise advice.....

It looks like I am separating from my wife of 10 years. Luckily so far there is no acrimony, we are just not making each other happy any more.

We live in a house worth about 400 K, with equity of maybe 225 K. Neither of us can buy the other out, so we will have to sell up, and get a house each, big enough to look after our 2 lovely kids whose care we will share.

So far so good.

The mortgage is with Nationwide, 3 yr fix at 2.89%, but will still have a year to run come October, which is around the earliest we might reasonably expect to complete a sale, so I may be in the hole for ERCs.

More cOncerning is what happens then. We have not come to a financial agreement yet, but let's assume that she walks away with 150 K of equity, and maintenance of 1200, in addition to her salary of £1200 per mo plus Child Benefit. What sort of mortgage is she going to be able to get on those terms, and what lenders take child and spousal maintenance into account?

I am less concerned about my ability to get a mortgage, even if I have 'only' the 75 K as my share.

Can the purchase of both new houses be contingent on the sale of the other, or is that just ridiculous? Should I be looking to move in with a friend or rent, or even stay with the family In the first new smaller house till I get my own place.

Anyway, apologies for the rambly post. I guess the biggest question that concerns me is the one about my wife's future ability to get a mortgage to buy a house.

Thanks!

Thrugelmir

Consult a solicitor and take advice. As no doubt your ex will.

Dave_Ham

Hi there,

Sorry to hear about your situation and fair play for considering all angles to ensure your kids are protected.

There are far too many variables to be specific, although there are lenders that will accept these forms of income in addition to earned income. They would want to see the maintenance consistent for a period in advance or court ordered, so you may need to prepare in advance as you are doing.

I believe given the level of deposit, so long as the property price is realistic this will be achievable.

You could consider (just consider) that you could still be jointly on the mortgage if absolutely needed, although you could have a 1% share of the property and do not necessarily need to live there due to your relationships.

This is fraught with loads of other considerations and variables and therefore I included purely for information and may not work or be comfortable for you both.

There will be options and worth considering if either of you could port the Nationwide mortgage, to mitigate what I would imagine will be a chunk Early Redemption Charge.

Good luck

jsaver

I guess I am looking for specific solutions to the problem of my wife getting a mortgage with low personal income, and there is some good advice above thank you.

I am looking to go through mediation as much as possible, and avoid too much time and money spent on solicitors. At the moment I trust that my wife is not looking to fleece me.

In addition it would be good to hear if anyone has any personal experiences they could tell me about.

dimbo61

Once it goes to solicitors it becomes a CAT fight with your solicitor looking out for your interests and your EX solicitor looking out for her interests.
Both solicitors making money for the firms they work for!!!!
If you rent you need a house/flat with room for both kids to sleep over night and if boy/girl a bedroom each ! Therefore 3 bedroom flat/house.
Does the EX want to sell ? Would she rather stay in the family home for the next 8/10 years with you paying the mortgage and living in the poor part of town?
Once you move out she can change the locks
Hope I am wrong but a lot of bitterness starts to happen and the kids end up in the crossfire.
Think carefully before you move out and go see a solicitor ( Male and divorced )
You may only get 25/30% of the equity if you want to keep your pension ? and then we have the CSA
Lenders will want proof of maintenance ie Court order or CSA
If she has any sense then she should look for a property up to £250K as a max.

Thrugelmir

dimbo61 wrote: »

Once it goes to solicitors it becomes a CAT fight with your solicitor looking out for your interests and your EX solicitor looking out for her interests.

It does not. Family law is now geared towards mediation and compromise.

The parties concerned create the CAT fight.

Where there are children concerned then the law has a bearing. As a court will always put the welfare of the children first. This more often or not has a fundamental bearing on the financial consent order.

zzzLazyDaisy

jsaver wrote: »

More cOncerning is what happens then. We have not come to a financial agreement yet, but let's assume that she walks away with 150 K of equity, and maintenance of 1200, in addition to her salary of £1200 per mo plus Child Benefit. What sort of mortgage is she going to be able to get on those terms, and what lenders take child and spousal maintenance into account?

Who will be the main carer for the children (I am assuming this will be your wife, since you say that she will continue to receive the child benefit).

In that case, in the divorce this will be considered. While the starting point is 50/50, the divorce courts have the power to adjust the shares in the property if this is considered just and equitable. It may well be that she will receive a greater share of the equity in the house, in order to provide a home for herself and the children.

You need to seek legal advice, and so does she.

jsaver

So she would nominally be the primary carer (3 nights with her, 2 with me, every other weekend). She makes 14.7K a year after tax (equivalent to 21K gross), though she might be able to work an extra day to make that 18.9K (28K gross). In addition she would be in receipt of 4.1K a year of benefit (Child Benefit and DLA).

She would also get from me in the region of £1000 per mo in child and spousal maintenance, though nothing is agreed yet

I am imagining that she would have 150K of equity from the sale of the house and savings. She is talking about spending 280K on a house, thus requiring a mortgage of 130K on total income after tax, of 30.8K.

Is she being toally unrealistic, in terms of getting the mortgage required?

I don't think she is being unrealistic in terms of meeting payments, as with a low LTV and hopefully a decent rate, the repayments would be very manageable.

She has stated that her parents are not in the position to help her out.

Previous posters have talked about me having a stake (albeit a small one) in her property, to assist in getting hold of the mortgage. I am not sure what the implications of this are.

I hope there is some new insight.

Best,

J

comeandgo

Is spousal contribution still going on? I thought that had stopped. Also as has been mentioned here you need to consider what pensions you have built up as these will be split too so if your pension pot is worth £100,000 she is entitled to half and also if she has any pension that will be split too.

kwmlondon

Just want to say how sorry I am that you're having to go through this. I'm impressed that you're looking at it from such a pragmatic point of view, and I really hope that you can continue to keep your focus on getting a good home life for your kids.

I know little about the mechanics of divorce but from what I've seen if you can come to an arrangement between yourselves then that would be preferable to involving solicitors to resolve the situation.

Good luck!

Thrugelmir

kwmlondon wrote: »

I know little about the mechanics of divorce but from what I've seen if you can come to an arrangement between yourselves then that would be preferable to involving solicitors to resolve the situation.

Good luck!

Having a party in the middle is extremely useful as removes the direct conflict. Family solicitors will push their clients towards mediation services. There's often issues which require the parties to compromise. The problems normally arise when both parties realise that the pie isn't big enough to meet everybody's demands. Mediators will not advise on legal aspects which is where consultation may be required with a solicitor.