Mortgage / Seperation query

Jason_G_2

Morning all,

I am looking to set-up my first mortgage with a partner and had a query that I cannot seem to find a simple answer to.

Using purely arbitrary values, if I borrow £200,000, with a total repayment over 25 years to be £300,000 but after a few years the relationship broke down, would I be liable to pay the full £300,000, or would it be the outstanding debt from the £200,000 that was borrowed? Negating any ERC etc.

Hopefully that makes sense!

Thanks,

Jason

TBeckett100

You would be liable for the outstanding balance at the time. The £300k is the total cost of borrowing (assumed) over the whole period. If you are borrowing 200k on a repayment mortgage, I would expect your debt to reduce slowly over time.

so you break up with 150k owing, you just sell and repay £150k from the sale proceeds and messily divide the equity between yourselves. If she leaves you, you could try to raise a remortgage on your own to remove her from the mortgage and vice versa. Whilst you ar eboth on the mortgage, you are both liable.

If she discovers your Ashley Madison account........:eek:

Jason_G_2

Thank you for your reply, is it therefore safe to say that if the relationship ended and house sells for what we paid for it, we could simply repay the £200k (less any amount of the debt that has been paid off) and call it a day?

My concern is that I would borrow the £200k, the relationship fail but I have to repay £250k from the sale of the house due to the total £300k cost of borrowing.

Thanks again

Gorg

Jason_G wrote: »

Thank you for your reply, is it therefore safe to say that if the relationship ended and house sells for what we paid for it, we could simply repay the £200k (less any amount of the debt that has been paid off) and call it a day?

My concern is that I would borrow the £200k, the relationship fail but I have to repay £250k from the sale of the house due to the total £300k cost of borrowing.

Thanks again

As long as you are on a repayment mortgage and keep up with your payments, the amount to pay off at any one point is unlikely to be more than you borrowed in the first place. The idea of a repayment mortgage is that you are constantly reducing the total debt.

The only things you might come across are negative equity (if house prices drop and the property becomes worth less than you borrowed), or early repayment fees.

The 'total amount payable' on the loan purely refers to what you would have paid back if you take the full term (say 25 years) at an assumed interest rate. (As an aside, you can reduce this amount significantly by overpaying)