Divorced - need advice with Mortgage please.

MartinW6

Hi all,

I'm Hoping someone can provide some advise regarding a tricky situation I've found myself in.Early last year, my ex-wife and I divorced. She currently resides in the matromonial home with our two children (aged 11 and 5 respectively). As part of the Consent Order, I agreed not to force a sale on the house until the youngest turned 21. However, whilst I hope that our lender, Nationwide, will allow my name to be taken off the mortgage, the mortgage itself is due to end Janaury 2023.

Some facts;

The mortgage is for £115,000.

The house has been valued at £250,000.

My share upon sale of the house will be 40% of the equity.
Currently, my ex-wife pays 2.5% interest (2% above the base rate).

She's been co-habiting with a 26 year old man for 18 months, and they are expecting twins early next year.

My ex-wife has a good credit rating. Her partner has a terrible credit rating.

It's an interest-only mortgage, but at this present time, there is no money in the endowment to pay it off in 2023.

I'm 41 and my wife is 33.

Her partner is a relatively low earner (18k?). My ex-wife is a stay-at-home mother.

During the period of the mortgage (which began in 1996) no payments have been missed.

I am no longer liable to pay the mortgage. Sarah and her partner have been doing this since July 2012.

There are a couple of things we'd like to achieve;

We'd both like to be able to take my name off the mortage.

I'd like to be able to take out a mortgage with my own partner.

I've spoken with Nationwide this morning about what options might be available, and intend to visit a branch to discuss various options with them. However, before doing so I have some questions I'm hoping someone could answer, or provide advise for...

Based on the fact that there will be a big shortfall when the mortgage ends in 2023, Nationwide explained that it may be possible to extend the mortgage to 40 years or to the age of 75, whichever comes first (in order to ensure an endowment is put in place which will pay off the mortgage at a later date). It may also be possible to change to repayment mortgage. My ex-wife and her partner seemed to have discussed this, and appreciate that it might cost more each month. However, they need to be careful - could altering the terms of the mortgage mean that my ex-wife has to go onto a mortgage with a higher
interest rate? As I previously mentioned, she currently benefits from a mortgage which is 2.5% (2% above the base interest rate).

Taking my name off mortgage relies on credit check. Is this based on my ex-wife's credit rating, or her partner's also? My ex-wife's credit is fine. Her partner's is awful. However, I believe that the title deeds will go solely into her name.

My ex-wife and her partner are open to the idea of buying out my share of the house, (which would work out to around 55k) BUT they'd have to exend the mortgage. How likely is it that Nationwide would let them take my name off the mortage, let alone extend it? I'd be very willing to show flexibility in terms
of reducing the 55k if it meant I could get my name off the mortgage and add to the deposit I'm saving in order to get a mortgage with my partner.

Could my ex-wife consider extending the mortgage beyond the terms of the consent order (e.g. to 2029, when my youngest daughter is 21)? As I mentioned, the current mortgage is due to finish January 2023). That way, the house will need to be sold before the interest-only mortgage needs to be paid off.

Any thoughts or advise would be gratefully received.

GwylimT

Her partner would only effect the mortgage if your ex wanted his name to be on the mortgage, otherwise its fine and it will only depend on your ex's financial situation.

DS4215

As a SAHM, your ex-wife will be extremely lucky to get a mortgage on affordability grounds. She has no income (other than benefits), but if she includes her partners income then it will also include his poor credit history...

MartinW6

DS4215 wrote: »

As a SAHM, your ex-wife will be extremely lucky to get a mortgage on affordability grounds. She has no income (other than benefits), but if she includes her partners income then it will also include his poor credit history...

That's what I figured to be honest. However, can you clarify what you mean when you say 'get a mortgage'. Technically, she already has one. Do you mean that in order for Nationwide to release me from the mortgage my ex-wife would need a NEW mortgage, which is unlikely to be granted as a) she can't afford one on her own, and b) if she includes her partner, his credit rating screws things up.

It's unlikely that the option of buying my percentage of the equity is plausable, isn't it (based on the conditions above)? I'm assuming that, to do so, my ex-wife and her partner would have to take out a second (albeit smaller) mortgage, or extend the existing one. Both of which Nationwide and unlikely to accept.

Essentially, am I looking at renting long-term as my only option? Does the large amount of equity in the home provide any hope?

Thrugelmir

MartinW6 wrote: »

I am no longer liable to pay the mortgage. Sarah and her partner have been doing this since July 2012.

Your are named on the mortgage so are jointly and severally liable for the debt. Irrespective of any private arrangements you have made.

MartinW6

Thrugelmir wrote: »

Your are named on the mortgage so are jointly and severally liable for the debt. Irrespective of any private arrangements you have made.

Thanks Thrugelmir. For the sake of argument, let's say that my ex-wife can't afford to pay the mortgage at some point in the future. She has four kids (two of which are mine), and her partner's modest income. I, on the otherhand, have been able to either get a mortgage with my partner, or - more likely - have a long-term rental agreement and am not in a position to assist her with repayments. What happens? If she defaults, would this force a sale on the house?

From what I can see, her choices in life are blocking any possibility of me and my partner from being able to build a new life together. I'm not trying to sound bitter, but she instigated the seperation, she chose not to go back to work but have kids instead and she chose to move in her low-income, bad credit rating partner. Can anyone tell me, based on the information I've given, if I've got any hope of being able to get on the property ladder ever again?

dimbo61

Your EX and YOUR kids live in a £250K property which costs £240 a month in Interest Only payments which you no longer make any payment towards.
Now I know well the CSA or what ever it is called now and I guess you pay maintenance for your kids.
You have agreed as part of the Consent Order not to force a sale until your youngest is 21 which is 16 years away but the current mortgage term ends in 10 years.
There is no endowment to pay off the mortgage and we hope by then that the Boyfriend has a well paid job and no credit problems !!!
£240 a month is very cheap rent for a house.
In 10 years time the value of the property may well have gone up and you get 40% if your EX and Boyfriend are forced to sell.
Nationwide are very unlikely to allow you off the mortgage

dimbo61

Boyfriend income of £18K a year
Maintenance from you for the kids
working Tax credit, child tax credit, Child benefit
Mortgage of £240 a month
If they do not pay the mortgage they get made homeless when the Nationwide repossess the property and it destroys her credit score and yours

Annisele

MartinW6 wrote: »

Thanks Thrugelmir. For the sake of argument, let's say that my ex-wife can't afford to pay the mortgage at some point in the future. She has four kids (two of which are mine), and her partner's modest income. I, on the otherhand, have been able to either get a mortgage with my partner, or - more likely - have a long-term rental agreement and am not in a position to assist her with repayments. What happens? If she defaults, would this force a sale on the house?

It wouldn't just be her defaulting - it would be both of you.

So far as the lender is concerned, you and your ex are both jointly liable for the whole debt. Any arrangements you've made between yourselves (i.e. that you won't be liable) are utterly irrelevant to the lender.

So, if your ex doesn't pay the lender, the lender can come after you for the whole of the monthly payments. You'd have to pay the lender - but your agreement with your ex means you can go after the ex for reimbursement. The problem with that is that if your ex actually had the money, she'd probably have just paid the lender to start wtih.

Ultimately, if the lender doesn't get paid it'll take the house into possession. With the level of equity it'll be a while before it does that - it certainly wouldn't start possession proceedings after a couple of missed payments - but that would be the end result. In the meantime, the mortgage arrears would be trashing both your ex's credit record and yours.

I think your best hope is that the new partner's credit record isn't as bad as you fear.

MartinW6

To summarise then;

Nationwide are very unlikely to let me take my name off the mortgage (presumably making it very difficult to get another).

If my Ex-wife defaults, the house is repossessed and both our credit scores get destroyed.

To be honest, I doubt that she will miss payments, at least whilst interest rates are extremely low. We're seeing the Nationwide next week - they might suggest switching to a fixed rate. I wonder if it'd be worth her doing so?

The only other hope I have, is that her partner's parents own their own home and could potentially act as guarantors.