House purchase then split

biscuit1_2

Hi all some views needed, my son and girlfriend recently bought a house together, they have been in it just over a month but it looks like things arnt working out apparently, possibly just the reality of what is actually involved in the day to day running of a home when mum and dad arnt there. Anyway it's just triggered the question of what happens if it is more than adjusting, would the house have to be sold if they both wanted it. If she didn't want to keep it but demanded a cut how would that be resolved, we suspect there will be no equity as we belive it was right at the very tip of top end price and local house prices back this up so if there was a loss due to sale would it fall on both of them.

Pixie5740

Is this the first time your son and girlfriend have ever lived away from home? They're not alone, lots of couples go straight from living at parents to buying a home together because they see rent as dead money (which it's not) and then the !!!! hits the fan.

Did they have a Declaration of Trust drawn up when they purchased the property?

p00hsticks

Too late now, but it's really something they should have talked about and agreed how to tackle before they bought the house.

The problem now is that both will have put money into the property and may well expect it back if one of them walks away, but they need to recognise that in the short term there is unlikely to be any equity in the property and money spent on legal fees, searches, stamp duty etc has effectively gone.

If they have a joint mortgage that was based on both incomes then they also need to be prepared for the fact that the lender is unlikely to allow either one of them to remove their name from the mortgage/title deeds even if they are no longer living in the property.

If the mortgage stops being paid the debt the lender can chase either or both for the entire amount, regardless of whether ther are living in rthe house or not.

Moral of the story is - perhaps try renting for a while to see if you can actually live together before commiting to something as life changing as a house purchase

always_sunny

p00hsticks wrote: »

Too late now, but it's really something they should have talked about and agreed how to tackle before they bought the house.

It is very hard to do, a happy couple discussing how they will split assets!
If they are not married they are no obligation beyond what's on the title/mortgage?

ST1991

Before discussing the worse-case-scenario and potentially snowballing, they should find out what isn't working.
Discussing splitting assets etc can quickly turn a happy couple into a bitter one...

If they want to make it work, recommend couples therapy or something similar. It's worth a shot, if they both want to work at the relationship but have hit a wall!

How did they split the house when it was purchased. Joint tenants..?

foxy-stoat

If one of them wants to keep the property then they will need to pass the lender's affordability criteria, if they cant then it will have to be sold.

If the lender agrees that the mortgage is affordable to one party then happy days....unless the other party wants something out of the transfer, then back to the lender to see if they can borrow the additional money, if not then it will have to be sold.

If the lender agrees do the transfer without the need for Early Repayment Charges then its just legal costs for both sides and transfer fees, maybe stamp duty depending on value.

All this assumes that the party who wants to own it can actually afford it on their own.

What percentage LTV was the mortgage?

AnotherJoe

biscuit1 wrote: »

Hi all some views needed, my son and girlfriend recently bought a house together, they have been in it just over a month but it looks like things arnt working out apparently, possibly just the reality of what is actually involved in the day to day running of a home when mum and dad arnt there. Anyway it's just triggered the question of what happens if it is more than adjusting, would the house have to be sold if they both wanted it. If she didn't want to keep it but demanded a cut how would that be resolved, we suspect there will be no equity as we belive it was right at the very tip of top end price and local house prices back this up so if there was a loss due to sale would it fall on both of them.

Did you ever see the episode of Steptoe and Son where they divided the house in half? Failing that, yes. Either to one or the other or someone else, but is it realistic either could afford the mortgage by themselves? Seems very unlikely to me.

As you say they will likely take a hit on this. Dont forget the Early Repayment Charge on the mortgage as well. No doubt they went for a 5 year fix making it worse?

AlexMac

always_sunny wrote: »

It is very hard to do, a happy couple discussing how they will split assets!
If they are not married they are no obligation beyond what's on the title/mortgage?

... except it's not the "happy couple" asking the Q... its one half of the happy couple's concerned parents...!

Probably the hardest decison for the OP is how far they should get involved? I've noticed that young people today seem to involve others - including parents - in their life, loves, traumas and decisions in a way that I would have found inconceivable 40 years ago when I was working out my relationships. I understand your concerns... but

...Not sure it helps to have a team conductiong negotiation by proxy...

Let's hope they work it out

saajan_12

OP, if there's little equity and one of them don't meet affordability on their own, then it'll be difficult. If they are out of the fixed period, then best would be to sell and split whatever's left down the middle after the mortgage is paid off. If one put in significantly more into deposit/fees they could take more of the equity and agree to a payment schedule after if necessary. Note they likely won't both get back everything they put in.

Alternatively, one could remain and get a lodger (if there's space e.g. another bedroom) with the understanding that the resident person covers the mortgage with the help of the lodger income. However both owners are liable to the lender in the event of nonpayment. Also they would need to decide what to do with any profit / loss on the value when they do sell (and any capital gains tax payable by the non-resident person)

always_sunny wrote: »

It is very hard to do, a happy couple discussing how they will split assets!

Not really! When my partner moved in (happy couple) we sat down and discussed what everyone would be contributing and what would happen if we split. And that was just for a rental after 3 years dating and no plans to change!

JP1978

I think a lot of couples would go through the same to be honest - maybe some support from their respective families would help them settle in and get into a routine.

[Deleted User]

If they have only been in the house a month, they really do need to work on their relationship before giving up. As you pointed out, it is a stressful time, so the worst tends to come out.

Can you guide them into less 'prideful' reactions (its him, no its not its her/other him) and seeing that a relationship and home needs to be worked on - with compromise in mind.