Separation and Mortgage

slou1975

I have recently seperated from my partner, and I need some advice on how to untangle our finances.

We bought a house 1.5 years ago, and the value of the property has risen by about 15-20k since then. I feel I have several options in front of me, but I am unsure which to take and why.

I have moved out of our shared home, and back in with family so I am currently rent free. Although this won't last forever, and I will need to rent a room in a shared house or flat sometime early next year.

My main issue is should I...

1. Force a sale of the property and take my share of the interest out the property to pay off my only outstanding debt -my old student loan debts? (which are a similar value to the interest acrued on the property, and continue to be a totally manageable monthly payment each month).I would be completely debt free after doing this.

OR...

2. Force a sale of the property and take my share of the interest out of the property and place it in a suitable savings account to save for my next/future chance to purchase a property. (As my debt payments are totally manageable).


I am thinking that option 2 maybe the best idea, as it is unlikely that I will have access to a lump sum of cash to put into a new property in the future like this again, and I don't want to ruin my ability to buy later on. I know it is bad, but I don't have any savings to fall back on, and my income is only an average income so saving a large deposit in the future is likely to be extremely difficult and could take me several years.

OR... (The 'wild card' idea that may or may not be possible)

3. Wait for the pain of the separation to calm down, and then begin to discuss with my ex-partner about keeping my share in the mortgage for the meantime by placing a tennant into the spare room in the house. My ex has a terrible credit rating and much larger outstanding debts than me, so keeping my name on the mortgage would benefit my ex and this would allow me to keep my interest in the property market until one of us wanted to sell. (I think this option maybe quite unlikely though).

Any advice would be greatfully received..

Badger_Lady

Purely based on my recent experiences, you can't "force a sale" unless you had a specific agreement drawn up when you bought the property. In most situations, you both need to sign the sale documents and your ex is therefore able to prevent any sale from going through.

If s/he didn't want to sell, s/he could keep living there and either a) pay the mortgage (with or without your help), or b) default on the mortgage and get it reposessed, leaving a big black mark on you both.

It is also unlikely that your ex will be able to remove your stake in the mortgage: S/he would need to either keep your name on the deeds (entitling you to an equal share of the equity), or carry out a "transfer of equity" whereby s/he takes on the full mortgage (which s/he can only do if the mortgage company is happy that s/he can afford to do so), in return for which s/he will normally have to pay you the amount that you "own" (according to valuation) minus purchase and sale costs (projected).

It's a sticky situation - the best way is to sit down with your ex and agree a plan of action. If s/he is happy to accept a lodger, this will enable him/her to continue living in the property. However, it does present a financial hangover from your relationship, since you will continue to be tied through the property, sharing the risks and deferring the problem of dealing with a sale when the time comes.

Your best bet will be to agree to sell and split the proceeds. It's a big shame for you both to have to step back off the property ladder but, if you can't afford to buy individually, it's just not a viable option. Take the money, pay off your debts, start saving and buy a new property when you're really ready.

macaque_2

Although you believe that the property is worth £15 - 20K more, that is paper profit. If you try to realise it, this could easily evaporate during the sales process. If I was in your shoes, I would ask your ex for £10K. If he/she agreed to £5K I would take the money and walk away.

carpetbelly

Firstly, I'm assuming this is a joint mortgage as you don't specifically say this.

If it is, I personally would want to be selling my share up asap and then writing to all the bureaus to ensure you dissasociate yourself financially from your ex partner. Basically, any bad rating they have, if you have a financial link with them such as a joint mortgage etc, will effect your rating as well.

Also, if your only debt is a student loan then I personally wouldnt pay that off either. I'd pay that off at the amount they recommend. This is because these loans (in my day which wasn't that long ago now ish) are generally at low rates compared to a decent savings rate you could get with the lump sum you could get back from the house.

CHR15

Good luck to you!!

I am in a similar position. I separated 2 years ago but cannot get off the deeds as my ex wife cannot obtain the mortgage on her own.

There is an outside chance she may be able to Self Cert but it is unlikely (she uses student grants and maintenance payments to pay the mortgage).

A sale cannot be forced as our children also live there (I think I can ask, but there isn't a judge in the land who would order the sale)

Problem for me is that although I no longer live there, the mortgage payments (irrespective of if I actually pay them) have to be deducted from any mortgage offer I am made.

I feel in a complete rut! having to rent a decent house as the only mortgage I could get would only allow me to buy in a poor area.

I have offered her the house in its entirity, so she would not have to pay me anything. She just keeps it all.

My opinion is that if you can sell, do it now.

I also completely understand what you say about access to a lump sum (although few agree with this method)

Curv

carpetbelly wrote: »

... ensure you dissasociate yourself financially from your ex partner. Basically, any bad rating they have, if you have a financial link with them such as a joint mortgage etc, will effect your rating as well.

What carpetbelly said. This is the key part... you don't want to be dragged down by their record and find you can't rent or buy somewhere because you can't pass a credit score.

Richard_Webster

Purely based on my recent experiences, you can't "force a sale" unless you had a specific agreement drawn up when you bought the property. In most situations, you both need to sign the sale documents and your ex is therefore able to prevent any sale from going through.

If s/he didn't want to sell, s/he could keep living there and either a) pay the mortgage (with or without your help), or b) default on the mortgage and get it reposessed, leaving a big black mark on you both.

It is also unlikely that your ex will be able to remove your stake in the mortgage: S/he would need to either keep your name on the deeds (entitling you to an equal share of the equity), or carry out a "transfer of equity" whereby s/he takes on the full mortgage (which s/he can only do if the mortgage company is happy that s/he can afford to do so), in return for which s/he will normally have to pay you the amount that you "own" (according to valuation) minus purchase and sale costs (projected).

There is a lot of sense in this. The trouble is that if you appear to be too desperate to get out (and there could be reason if she has a bad credit record and could drag you down too) then you will end up settling for a smaller amount of money than you would like, e.g s/he says that regardless of what you may or may not be entitled to s/he can only raise £X on a remortgage.

It would cost quite a bit to go to court to get an order for sale. If you have nerves of steel and don't mind having a bad credit record (caused by him/her) then you could disappear - go and stay with a friend in Australia and let it be known through a long chain of friends (so s/he can't contact you easily) that if s/he wants to sell you might consider doing so for £Y (much more) then let her stew for several months or a year or two before making any further noises to him/her. If s/he realises that s/he will have a job selling without you then s/he might do a deal that is more favourable to you because s/he is desperate.