Breaking Up & Selling House (Fair & Square)

beachjustice

Hi guys,

I know there are probably a billion other threads like this, so please forgive the repetition, but I pretty much joined MSE out of desperation because I need some advice, and didn't know where else to look (for free).

My girlfriend and I are probably going to split up in the coming days or weeks, as we've hit something of a downwards slope in our relationship. We'll keep the blame game out of this, but there is the potential for an amicable break up.

Anyway, I wholeheartedly admit that we rushed into buying a house together. We thought that our seven years of friendship and then a year and a half of being in a relationship (and negligible arguing in that time) would surely mean that we had seen the best and the worst of each other. How wrong we were. We have lived together now for not even eight weeks, and we are simply too different to carry on happily. You really don't know someone until you move in with them, it seems.

We bought a house for £195k. Her mother gave her £40k for a deposit, which we used. The exchange date was October 27 2014.

Neither of us know what happens now. We need to go our separate ways, but we don't want to have to suffer negative equity. I need to know what our realistic options are that involve separating. I honestly understand that the deposit was her/her mother's contribution, and so it is fair that I don't see any gain from that. I don't even mind if she keeps all the stuff - the sofa, the fridge, the washing machine, etc. I just want to - ideally - be able to walk out of this thing with minimal loss. I have enough money to start renting with a friend right away, or move back with my family.

I can provide more information if it is needed for feedback. Any advice, large or small, would be greatly appreciated. Thank you.

Pixie5740

You'll find it difficult to sell within the first 6 months of owning it.

What kind of mortgage do you have? Is your gf able to get a mortgage in her own name to pay off your joint mortgage?

xylophone

If there is the potential for an amicable separation then there is enough goodwill between you to tolerate living in the same house for a while longer?

http://www.relate.org.uk/ Try this first?

beachjustice

Thanks for your replies.

Pixie5740 wrote: »

You'll find it difficult to sell within the first 6 months of owning it.

What kind of mortgage do you have? Is your gf able to get a mortgage in her own name to pay off your joint mortgage?

I was afraid of that.

We have a joint mortgage and a joint tenancy agreement (50/50); the mortgage is over 30 years. Neither of us has an overwhelming attachment to money, so the legal/financial side will be fine to make agreements on. But as for her taking on the mortgage by herself...I don't think she has the ability. I had suggested that I just move out and deal with the bank haemorrhage, but I'm not sure if I could, thinking about it a bit more deeply.

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xylophone wrote: »

If there is the potential for an amicable separation then there is enough goodwill between you to tolerate living in the same house for a while longer?

That's an interesting question. My reckoning is that if we stayed under the same roof, we would inevitably just to work it out and then inevitably fall out again. I think the selling up and moving on is an effort to pull this issue out by its roots. Thank you for the link, I'm looking now, and I'll definitely pitch this to my partner when the time is right.

PS. Sorry for removing your link from the quote, MSE won't let me reply with links as a new user.

fishpond

Possibly rent a room or let out for 6 months. Just thoughts.

princeofpounds

Well the good point here is that because the ownership period has been short then there is less room for misunderstandings on the equity ownership.

As the others have mentioned, the first option to try is to see if she is willing and able to take over the mortgage herself. This will require her agreement and that of the mortgage lender. But you say the chances of that are slim.

Then the next best thing to do is to sell the property and go for a clean break. So how to split the equity left behind? Unless you contributed some of the deposit then she (or rather her mother) should basically get it all. You will have paid down almost zero of the principal amount of the mortgage in the first few months, so all the equity in the house originates from that deposit.

Where it might get trickier is if you fail to sell at a sufficient price to recover the full deposit... Theoretically fees should be split (or paid by the party taking blame) and any further shortfall or gain in equity should be taken by the equity owner, but a shortfall might be difficult to accept and so again you might be asked to split it. It wouldn't be that unreasonable as the whole thing is more like the cost of a failed experiment than a long term investment.

But you aren't going to suffer negative equity - where a house cannot be sold because the mortgage cannot be repaid - unless you vastly overpaid; the 40k of equity provided by the deposit is a big buffer.

You won't be able to sell easily for another 4 months or so but you can start marketing slightly earlier.

Old_Git

how long was the house on the market before you bought it .
Are there any penalties for repaying the mortgage early.

TheCyclingProgrammer

Pixie5740 wrote: »

You'll find it difficult to sell within the first 6 months of owning it.

Although if they put it on the market in January, say it takes about a month to get a confirmed offer, that's already 4 months. As long as whoever puts an offer in accepts they will have to wait until April to complete if they have a mortgage, shouldn't cause too much trouble.

[Deleted User]

Obviously you both have the freedom to choose what you do.., but I'd wonder what could have happened in 8 weeks to change so many years of friendship and relationship? Is it not worth both of you trying to work it out. If you have only lived together for eight weeks, and previously were in one kind of relationship or another.., isn't it worth trying a bit harder? To give up on a relationship after just eight weeks seems a bit on the quick side?

Obviously if one of you is an axe murderer or one of you has discovered you don't go for the gender you thought you did.., then its a bit different, but surely after all this time there is something you can both work on?

I'm not asking you to give both of your life history online.., just wondering how much you've thought about it. Eight weeks is such a short time.

BobQ

If £40K was the entire deposit, you cannot fail to make a loss. You have already lost the buying costs and now you have to lose the selling costs. Her share of the selling loss will presumably come out of the deposit, yours will come from where? Your savings? Obviously if you can sell at a profit then you may not lose anything. But it is possible you will have mortgage fees for selling in such a short time.

How big is the house? Is it feasible that you could walk away from your relationship but live there as house sharers and get on - you said you were friends for 7 years.

Could you draw up a legal agreement under which (say) you move out but agree to pay some of the mortgage for a set period (say) 2 years and then sell the house?

beachjustice

Thanks again for the replies.

princeofpounds wrote: »

Well the good point here is that because the ownership period has been short then there is less room for misunderstandings on the equity ownership.

As the others have mentioned, the first option to try is to see if she is willing and able to take over the mortgage herself. This will require her agreement and that of the mortgage lender. But you say the chances of that are slim.

Then the next best thing to do is to sell the property and go for a clean break. So how to split the equity left behind? Unless you contributed some of the deposit then she (or rather her mother) should basically get it all. You will have paid down almost zero of the principal amount of the mortgage in the first few months, so all the equity in the house originates from that deposit.

Where it might get trickier is if you fail to sell at a sufficient price to recover the full deposit... Theoretically fees should be split (or paid by the party taking blame) and any further shortfall or gain in equity should be taken by the equity owner, but a shortfall might be difficult to accept and so again you might be asked to split it. It wouldn't be that unreasonable as the whole thing is more like the cost of a failed experiment than a long term investment.

But you aren't going to suffer negative equity - where a house cannot be sold because the mortgage cannot be repaid - unless you vastly overpaid; the 40k of equity provided by the deposit is a big buffer.

You won't be able to sell easily for another 4 months or so but you can start marketing slightly earlier.

I will try and see if my partner can take the weight of the mortgage on her own. I'm quite sure that she will if she can, as she isn't as lucky as I am with respect to fallback options (i.e. family to live with and get on with). I just don't think she could do it on her income. Unless the monthly repayment figure can go down, I doubt she'll be able to live comfortably.

I'm fine with not seeing a penny; I didn't contribute. Are you saying that if we sell the house for the price we bought it (not including estate agent fees, stamp duty, etc.) - just the net value of the house - then we can pretty much write off the expense incurred as a life lesson? In two months, the house will have barely appreciated, I know. I'm wondering whether we should try and just not be together under the same roof for four months (which sounds excruciating). Hm.

Old_Git wrote: »

how long was the house on the market before you bought it .
Are there any penalties for repaying the mortgage early.

I believe the house was marked for two to three months before we put our offer in. And there are definitely penalties for paying the mortgage early, but doesn't that mean paying off the mortgage in full, circumventing the credit?

deannatrois wrote: »

Obviously you both have the freedom to choose what you do.., but I'd wonder what could have happened in 8 weeks to change so many years of friendship and relationship? Is it not worth both of you trying to work it out. If you have only lived together for eight weeks, and previously were in one kind of relationship or another.., isn't it worth trying a bit harder? To give up on a relationship after just eight weeks seems a bit on the quick side?

Obviously if one of you is an axe murderer or one of you has discovered you don't go for the gender you thought you did.., then its a bit different, but surely after all this time there is something you can both work on?

I'm not asking you to give both of your life history online.., just wondering how much you've thought about it. Eight weeks is such a short time.

I completely understand where you're coming from. Without context, it does seem a bit sad, and just as quick off the mark to try and sell a house after eight weeks in it as buying it after 18 months. I wouldn't go as far as to say it was impossible for us to somehow work it out, but certain things (her job making her exhausted every single day, our completely different ways of wanting to run/being comfortable in a house, our suddenly completely different values) are making it easy to argue and hard to be happy together. I have learned various things about her since spending a lot more time with her, plus she has said that she has given up. I'd like to try whatever it takes, but each time things come to a head - which has become most days - it leads to the question: "why are we doing this anymore?"

I hope you're right, though. I'd rather fix this than quit, but if I have to quit, I just don't want a financial kick in the balls, too.

BobQ wrote: »

If £40K was the entire deposit, you cannot fail to make a loss. You have already lost the buying costs and now you have to lose the selling costs. Her share of the selling loss will presumably come out of the deposit, yours will come from where? Your savings? Obviously if you can sell at a profit then you may not lose anything. But it is possible you will have mortgage fees for selling in such a short time.

How big is the house? Is it feasible that you could walk away from your relationship but live there as house sharers and get on - you said you were friends for 7 years.

Could you draw up a legal agreement under which (say) you move out but agree to pay some of the mortgage for a set period (say) 2 years and then sell the house?

I did think that this was probably the case; that my savings would inevitably be affected, but I thought I'd see if there was a way around it. Since it's such a short time, like you say, there is almost certainly not enough upside to net the whole thing to zero.

The house is a two bedroom terraced house. We were great friends - best friends, actually - but this is something we've both previously acknowledged is a one-way street. We can't really see how we'd go back to being friends, especially living under the same roof and having to see each other every day and be reminded of what life is like now.

Your mention of a legal agreement is interesting, I will look into that further and see if there's a viable option. Thank you for that.