Splitting up - mortgage questions

Fischer101

Me and my partner have decided to split amicably. I would like some advice on where to go from here.

We do not have children or major debts, our house is joint mortgaged. Currently, he has zero debt and I have around £5,000 in credit cards which I am paying off. We worked to reduce his debt as he had a lot at high interest rates when we first bought a house. I am not looking for anything extra to cover my credit cards as I want to keep this amicable. I will have mine paid off before the end of the year so I am not too worried about it.

According to various websites and looking on rightmove.com the house is worth about £200,000 and our outstanding mortgage is £164,930 from our last statement in May. We are out of any redemption penalty periods and as far as I can see, no other looming bills or debts. Assuming that we do sell for our estimated £200,000, including estate agent's fees, I would guess that's a good £30,000 to split?

My intention is after the sale to move into rented accommodation as cheaply and as near my work as possible. From my calculations based off what is available to rent, including the £15,000 proceeds from the house sale and saving most of my salary, I can raise approximately £30,000 after a year of savings and zero debts. I intend to use this as a deposit on another home in a year's time.

My question is, would I be seen as a first time buyer again, or would I classify as a remortgage/home mover? How do mortgage providers view people in my situation in terms of risk? The current mortgage has never had a payment missed and my credit record shows absolutely no black marks.

I also think I am also getting a little confused with the online "How much can I borrow" calculators. All ask me my income and deposit amount. When the say "We may be prepared to lend you £x", does this mean that this is the budget I have to purchase another home, or do I add my deposit to this? I would have thought my deposit would account for 15% of the home's value and I would be allowed up to a multiple of 4 times my salary with a maximum of 85% of the purchase price coming from the house's purchase price. Am I right in that? So even though Nationwide's calculator says it would lend me up to £172,000, including my deposit, my available budget is £202,000? I wouldn't actually spend that on my house, it's a bit too much in my opinion, however I just wanted to get my facts right.

As another thought, another option is to buy my partner out. He does not want to buy me out as he wants to move county. I have a salary of £35,000 per year and I can well afford the mortgage payments on my own but I do not have the £17,500 required to buy him out and would have to either raise a loan or remortgage to allow for this. I am happy to stay in the house, although things would be tight.

My question is that a sole remortgage coupled with the required £17,500 to buy him out does not sound like something I could do given my available equity and salary. I know I can ask my current provider to consider me as the sole name on the mortgage, however the mortgage we have now is from the sub-prime market as he had credit problems in the past. My credit record is clean and I have never missed payments ever. I would like to seek a provider from a non sub-prime lender. However, as I said, I am doubtful that my salary and equity would be enough to remortgage and draw down enough to buy my other half out.

Does everything sound reasonable? Or have I missed any details which could bite me, or any options I have not thought of? Would it be prudent to attempt to buy him out and face a higher mortgage cost, or should we just sell, I save for a year and buy then?

S.

wooders

similar position

house worth £210000
mortgage £60000 / 12 yrs to go

wife & 2 kids reside there, I do not want the kids lifestyles to change nor cripple the wife

options as I see
1. small payoff from her
2. give her the house (I left )
3. try to buy her out, not sure if I could afford that though

as OP am I a first time buyer? or a re mortgager?. Currently renting.

advice please

holly_hobby

You aren't technically a first time buyer, as you have held interest in a property.

However, from a mge lenders point of view, some will treat you as a FTB if you haven't held a mge for say the previous 6 - 12 mths, some however will go by the letter and class you as a subsequent purchaser (you also would not qualify for any HMRC FTB Stamp Duty incentive).

Mge lender wise, your FTB status would obv only be relevant if you like the look of a specific FTB deal that was on offer, although there tends not to be that many specific FTB incentives (save currently halifax).

With regards to buying him out - this would technically be a transfer of equity, and as I understand it you are currently with a sub-prime lender, so obv the best solution (with your clean credit history) would be to remortgage to a main stream lender, whilst releasing the reqd equity and simultaneously removing him from the deeds.

Depending on several factors you may be able to achieve this, and I would certainly engage a whole of market broker to assess what is possible and with which lender, if you do wish to retain the house post split.

Of course, if you can't effect a TOE, or you just wish to get out of the property itself, completely selling up and going into rented for a period would be another alternative as you have discussed ...then seeing how the market lies when you're ready to buy again.

Hope this helps

Holly