2nd mortgage on new home as old home lived in by ex-wife

danielmiller1975

Hi forum people…

I am sure I am not alone in this situation but I am also sure it is not too common… but here goes…

I bought a house during the boom, and it now it in negative equity (by about £15k). I got divorced around 18 months ago, and my ex-wife still lives in that house with the kids whereas I rent a house elsewhere. We currently split the mortgage repayments, insurance, housing tax 50/50 between us (the divorce agreement states that that we will share costs until the house reaches positive equity and we sell it – so could be years). The house deeds and mortgage is in both our names and the bank will not allow either of us to be removed from the mortgage as it is with RBS and the house is in Northern Ireland, where RBS no longer operate in the mortgage market.

So.. we are now 18months on, I have a new life and a new partner. we would like to buy a house together... she has no baggage and does not own a house (used to but no longer does)

Between us we have £25-30k deposit and houses around here are around £90-120k, so lots of options to get back onto the market

I am a fairly good earner and mortgage calculators are suggesting we can borrow up to £260k on a buy-to-let mortgage (closest option I could find for my situation)

However, what do you all think my chances are here? How would I be treated by the mortgage vendors? Would this be like a second home/ holiday home?, even though this would be my primary residence?

Would appreciate your thoughts on this

Cheers
dan

silvercar

Forget BTL, that would be based on projected rental income and require that you don't live in the property.

You want a lender that will see that you have an agreement that you only pay half the costs of the other property. No way round the fact that lenders will take into consideration that you have half the costs of another property to support and will require your income to be sufficient to do that.

Only other option is to delay buying until you can save enough money to cover the negative equity and sell the old home.

danielmiller1975

Hi Silvercar,

I really appreciate the fast reply, thank you!

To be honest, I had not even considered the fact that me only paying half of the other mortgage, might be a good thing to claim. I was going on the basis that the new lender would be assuming I have 100% liability on the other property (as there is nothing stopping the ex-wife claiming bankruptcy and doing a runner)

the bank will have no issue with ability to repay both mortgages... it is more what ort of deals might be open to me, as it will be treated like a 2nd home, even though it is not (if you get my meaning)

The reason I would like to buy now, is that the market is on the move here in N.Ireland, and there are some real bargains to be got and I would hate to be -re-entering the market yet again at the peak... I would prefer to stretch myself now and hopefully reap some of the benefits of buying at the “right time” (also, I pay rent right now and the cost of a mortgage would be less than rent, even taking into account the other costs and potential interest rises)

with regards to the other house, my ex-wife would still like to live there for a little longer, and if housing prices in that range were to rise by 5-8%, it would lift it to break-even against the mortgage and allow me to exit without too much pain...

thank you again

kind regards

ritz55

I had a similar situation as you back in 2009 but the other person in my case was my father.


After talking to my broker he suggested we go with Santander and apply for a second residential mortgage and explain the situation. (note my first residential was also with Santander).


Mortgage was approved so had 2 residential mortgages at the time both with Santander. I just had to prove that I could afford 50% payment on the 1st residential and the full payment on the second mortgage.


At the time the broker did look into Nationwide as well but there income criteria was a lot higher for the second mortgage so went with Santander.


Hope this helps.

Thrugelmir

danielmiller1975 wrote: »

I was going on the basis that the new lender would be assuming I have 100% liability on the other property (as there is nothing stopping the ex-wife claiming bankruptcy and doing a runner)

You do have a liability for the full mortgage in the event that that your ex is unable to pay it. Given it is your childrens home as well. You'd be hard pushed to remove yourself from the mortgage until they leave full time education.

danielmiller1975

thanks guys


I just went through a Tesco mortgage app with all the details. I actually put in that I pay the full amount on the ex-wife's home to make sure I have it covered... and they had no issues with the affordability by looks of it. I will still go out shopping for a mortgage at other places should my offer be accepted, but we shall see


thank you all.. hopefully over the next 12-24 months, the other house will go up in price to enable it to be sold and cover the mortgage. the ex-wife does want out at some point but we are essentially both tied to it due to the negative equity... Right now, I am confident she would not do anything crazy like file for bankruptcy and leave me with the full mortgage... but if she did, I would just take out an unsecured loan and then sell it and pay the difference...


thanks again for your help... if anyone has any other pearls of wisdom, I think we can call this thread answered :-)


cheers