Mortgage After Seperation

david76

My wife and I are currently in the process of separating. Everything has been quite amicable, but I have a head ache with the sheer logistics of it all.

We have decided I will retain the house, and this will remain the children s main home.

The mortgage is currently in our joint names, and I have spoken to our mortgage company, Virgin Money about how we go about changing it into my name. Apparently we need to go through a change of parties application.

I have done all the maths, and I know I can pay the mortgage. I am self employed, so they way I take money out of the business changes from month to month.... but I have always paid the mortgage and never failed to pay it. Im 100% certain that I have enough money coming in.

However, doing the 'how much can I borrow' on Virgin's site it would seem I am going to struggle to let them borrow the required amount. There is decent equity in the house (over £100,000). But on my basic salary of around £9k I think there may be a problem. They clearly say on their "change of parties form" that they dont take into account dividends for example.

So, what do I do. The mortgage is in Mr & MRS name, and MRS wont exist soon. I could leave the mortgage as it is, and just pay it as always, but really I want to get the deeds changed into my name and cant do that without going via Virgin Money.

Does anyone have any advice on how to handle this?

kingstreet

Remortgage to a new lender and do the transfer of equity at the same time?

This depends on you being able to demonstrate affordability, usually in a similar fashion to your current lender, through SA302s from HMRC, although many lenders take salary and dividends into account.

david76

Not really an option as getting out of the current deal would cost £5k plus. And even though I can pay the mortgage on my own (and have been doing for several years), I dont think I can tick the boxes which lenders want you to tick to proove affordability.

holly_hobby

If your proven income is not sufficient to svc the mortgage, then Mrs can't be released by your existing lender.

There are lenders whom will work on your share of net profit of company, which may help if you have low drawings, choosing to instead leave your capital in the company. If its just the issue that Virgin won't take dividends into account, there are plenty of lenders that will (in addition to drawn salary) - but you say you don't want to pay a 5k ERC. So you can't have it all I'm afraid.

It also confuses me that you say you have low declared earnings of 9k, and can't prove affordability, although you easily manage the mortgage and have for yrs, somewhat suggesting you are living on undeclared income - however Im sure I must have gotten the wrong end of the stick there.

Anyhoo, if you want to stay with Virgin, Mrs will have to stay on the mge, and will remain legally liable with you, for its continued servicing. You could however have a trust deed drawn up during your separation, which will be formally administered upon your legal separation or divorce - which basically states that after her moving out she will have not further financial or residential interest in the property - however she may be loathe to do that whilst she remains a jnt mortgagor with you.

Hope this helps

Holly

david76

holly_hobby wrote: »

If your proven income is not sufficient to svc the mortgage, then Mrs can't be released by your existing lender.


It also confuses me that you say you have low declared earnings of 9k, and can't prove affordability, although you easily manage the mortgage and have for yrs, somewhat suggesting you are living on undeclared income - however Im sure I must have gotten the wrong end of the stick there.

Anyhoo, if you want to stay with Virgin, Mrs will have to stay on the mge, and will remain legally liable with you, for its continued servicing. You could however have a trust deed drawn up during your separation, which will be formally administered upon your legal separation or divorce - which basically states that after her moving out she will have not further financial or residential interest in the property - however she may be loathe to do that whilst she remains a jnt mortgagor with you.

Hope this helps

Holly

Just to clarify, everything is declared. It is simply that the salary is just below the tax threshold, and the rest in dividends.....which virgin dont take into account.

Having done a bit more reading following your post it looks like the way forward will be to leave the mortgage as it is, with myself paying it. Apparently a consent order will solve our dilemma in the way you described.

thanks

TBagpuss

It may still be worth making the application - although their online calculator doesn't say you can afford it, the bank may also look at your history.

If they won't, then in your divorce order you can have the order say that you will use your best endeavours to get her released, that you will pay the mortgage and indemnify her, and set out that you and she hold the property on trust for you - this isn't ideal for either of you (she is at risk if you don't pay the mortgage, and will struggle to get another mortgage elsewhere) and not ideal for you, as although you will be the sole beneficial owner you will need her cooperation to sell or remortgage as her name will still be on the deeds.

PS - it's really importaant that you get an order in place either way.