selling to my husband!

aero1

Hello there!

I'm hoping someone out there can help me with this.
Basically my husband and I live in the house that I lived in with my ex-husband. The mortgage (Together mortgage from NRAM) is still in mine and my ex-husbands names.
I am unable to remortgage due to a poor credit history. The mortgage company is refusing a change a parties as my ex has a payment plan in place for the unsecured element of the mortgage.
My husband can get a mortgage on his own but really we don't want to move as love this house and area, kids schools and clubs etc.
So, we came up with a solution that my ex husband is also in agreement with -that we (me and my ex) would sell the house to my husband.
Perfect solution you would think - we get to stay there, my ex - husband gets his share of the equity, the kids stay in the house they love, I get my ex off my credit report as the loan is killing my score, everyone's happy. It would be a full on sale at market value and all done legally, then he would do the purchase, surveys etc, all legal and above board.
But apparently, Mortgage companies don't like that I would still be living in the house even though I wouldn't even be on the mortgage! And so we have been told its nigh on impossible to do this!
Please can anyone advise?

Thanks in advance.

(its all incredibly frustrating as we have pulled ourselves out of a very nasty financial situation - bankruptcies - and now we are trying to move on, yet all our options seem to be blocked!)

Thanks

pmlindyloo

I don't know much about mortgages but if you cannot do this then you will have no alternative but to move.

Have you looked to see what is available in the area?

A house is just bricks and mortar and it is far more important to get out of this financial mess than stay for the sake of a house.

Make it an adventure for all of you instead of regretting what you have to do.

ambioni

I suggest speaking to a solicitor and/or mortgage adviser about this one.

Thrugelmir

Why not be party to the mortgage? If your husband can afford the mortgage in his own right.

aero1

Hi thanks for your replies, much appreciated
Thrugelmir - unfortunately my credit score is in still in the 'very poor' area. Its why I cannot just remortgage...
Ambioni - our financial advisor applied to Nationwide as my husband passed their basic criteria but then they knocked it on the head when they found out the scenario/background.
PMlindyloo - I love the idea of looking at it as an adventure but basically we live in a lovely lovely area - to buy a house around here we would end up with paying up to the hilt which I guess would be ok except we really wanted to stay here in this house which would be affordable as just need to sell to my husband at the price to clear the existing mortgage and my ex's equity, if that makes sense?

I'm sure we will end up selling and starting afresh, I just wondered if anyone know for a fact that it is not possible to sell to spouse.

I probably sound quite whingey - but I have clung to this house through divorce and bankrupty and now just wanted it to be able to relax knowing its all ours and give it the tlc it needs to be a dream home.

Thanks

System

to buy a house around here we would end up with paying up to the hilt

You said he would be buying at market rate so won't you be in the same position whether you stay or move?

Annisele

aero1 wrote: »

We really wanted to stay here in this house which would be affordable as just need to sell to my husband at the price to clear the existing mortgage and my ex's equity, if that makes sense?

I'm sure we will end up selling and starting afresh, I just wondered if anyone know for a fact that it is not possible to sell to spouse.

I don't think the problem is "selling to spouse". I think the problem is "giving some of your equity to your spouse, then staying in the house".

It sounds as though your spouse is effectively buying the house at a discount, with the discount being your share of the equity. Is that right, or have I misunderstood?

TBagpuss

Part of the problem may be that you are already living there, but it shouldn't be insurmountable - the new lender is likely to need you to sign an indemnity acknowledging that the lender's rights take priority over yours.

You need to speak to a solicitor and a broker to see what can be done, and if you do go ahead, consider whether you and your husband should ahve a declaration of trust recording your interest in the property.

aero1

Hi thanks again.

!!!!!! - the houses nearly would cost about £30k more but would be no bigger so a sideways step which would be more expensive each month. this house needs some work doing to it, but it would still work out cheaper to stay here.

Annisele, yes you're pretty much correct, and now that I have read it in black and white, that is probably the problem. instead of walking away with half the equity, it basically would be staying in the house as such and thereby providing part of the deposit.

So, really maybe what we need to do is prove that my husband can pay the deposit himself as if it is nothing at all to do with me?
for example, I/we sell it to him for £200k - so he has a mortgage for £200k and he would need to show he has £30k deposit independent to the equity.
I pay off my mortgage and split the equity as agreed, and none of the equity would go into the new mortgage transaction.
would that be better? Thinking back on it, I think the advisor showed the equity as being part of the deposit.
And TBagpuss, thats a very good point you make and as y equity would at some stage all get poured back into the house, yes I would need that shown.

Thanks guy!

Annisele

aero1 wrote: »

So, really maybe what we need to do is prove that my husband can pay the deposit himself as if it is nothing at all to do with me?
for example, I/we sell it to him for £200k - so he has a mortgage for £200k and he would need to show he has £30k deposit independent to the equity.
I pay off my mortgage and split the equity as agreed, and none of the equity would go into the new mortgage transaction.
would that be better?

I'm not sure that would solve the problem, because I don't think this is about affordability. But then I'm not a mortgage broker, and I think you should definitely run your whole situation past an independent broker with experience in dealing with poor credit.

You're talking about selling the property to your husband at an undervalue (i.e. less than the market value), and you're effectively doing that in exchange for his promise you can still live in the house. From the lender's point of view, the issue is whether his promise to you (that you can stay) legally comes before or after his promise to the lender (that he'll pay the mortgage on time every month).

If the lender finds itself bound by his promise to you, it'll be nearly impossible for the lender to repossess if he stops paying. The lender doesn't want to get into that position, so if there's any risk of that happening it simply won't lend in the first place.

Does your husband have enough money to buy you out entirely? By that I mean can he pay a realistic open-market value for the whole house, funded partly by a mortgage and partly from his own money, so that you and your ex can both have the equity that you're due?

aero1

Hi Annisele

Yes he does, and that is what we were planning on doing. I have probably explained really badly

The house has been valued twice, we were going to agree somewhere in the middle of what we could reasonably expect to get if it was up for sale.

I think the issue has gotten confused by the fact that it looks like the equity is forming part of the deposit.
He can afford 15% deposit from savings and the mortgage repayments.

We had thought one solicitor deals with the 'house sale' for me and my ex. The payment comes through, we pay off the mortgage and split the equity and go our separate ways.
Another completely separate solicitor deals with the house purchase for my husband.
I get written into something, to protect my interest in the house.

Or have I still got it all wrong!

Thanks