Complicated situation

Cacran

My daughter who has a child, moved into a house with her boyfriend a couple of years ago.
The child is not his and he expects her to pay her way, (no problem there).
My daughter works part time at nursery attached to her child's school.There are no extra hours available but it solves the problem of after school care and pre school care so financially worth it.
Her boyfriend got a mortgage on the house having paid a deposit. We bought our daughter half the house.
They are splitting up. He wants his deposit back but she will be unable to afford the mortgage. The mortgage was a 15 year one and the amount outstanding on it is 60,000. There is a penalty of £2,900 to pay to end the contract.
She lived in rented property before with her child. She claimed some housing benefit. She would find it almost impossible to go back to doing it as now she has £75,000 coming to her, at least, if she sold the house, as we had to actually gift it to her. She would not be able to pay us back and claim benefits again as she would have made herself poor, if you know what I mean. We gave her the money in good faith to enable them to live in a proper home of their own without her being a burden to her boyfriend.
It seems that now we have got ourselves in a mess. We( and her) would like to stay in the property but as she only works 24 hours a week, and is not earning much, she would not be able to pay the mortgage that he took out as it is £400 per month. He said if he got his £10,000 deposit back he would walk away. If she got a mortgage for say a 30 year term for the £60,000, would she be able to do so without having to pay the penalty back or would that have to be paid back in any case as the current mortgagee is her boyfriend.
Or we could loan her the money and have us as part owner of the property. Or should we let her have it in her name.
It is very complicated. Any input would be appreciated.

foxy-stoat

Cacran wrote: »

My daughter who has a child, moved into a house with her boyfriend a couple of years ago.
The child is not his and he expects her to pay her way, (no problem there).
My daughter works part time at nursery attached to her child's school.There are no extra hours available but it solves the problem of after school care and pre school care so financially worth it.
Her boyfriend got a mortgage on the house having paid a deposit. We bought our daughter half the house.
They are splitting up. He wants his deposit back but she will be unable to afford the mortgage. The mortgage was a 15 year one and the amount outstanding on it is 60,000. There is a penalty of £2,900 to pay to end the contract.
She lived in rented property before with her child. She claimed some housing benefit. She would find it almost impossible to go back to doing it as now she has £75,000 coming to her, at least, if she sold the house, as we had to actually gift it to her. She would not be able to pay us back and claim benefits again as she would have made herself poor, if you know what I mean. We gave her the money in good faith to enable them to live in a proper home of their own without her being a burden to her boyfriend.
It seems that now we have got ourselves in a mess. We( and her) would like to stay in the property but as she only works 24 hours a week, and is not earning much, she would not be able to pay the mortgage that he took out as it is £400 per month. He said if he got his £10,000 deposit back he would walk away. If she got a mortgage for say a 30 year term for the £60,000, would she be able to do so without having to pay the penalty back or would that have to be paid back in any case as the current mortgagee is her boyfriend.
Or we could loan her the money and have us as part owner of the property. Or should we let her have it in her name.
It is very complicated. Any input would be appreciated.

Is the mortgage in joint names or just the boyfriend?

If she cannot afford the mortgage on her own, which is unlikely, then your choices are to sell or find an alternative funding source, either cash or mortgage in your name also, both of which would mean that the ERC will be payable.

Can she take the equity from the house sale and buy somewhere outright that is smaller?

Cacran

Thank you for replying. The mortgage is in the boyfriends name.

Cacran

Oh sorry the mortgage is in both names.

enthusiasticsaver

What is her annual income? I think this is going to be a non starter as presumably the £10k to buy out the boyfriend will have to be added to the mortgage unless you are willing to give it to him. I am not sure if there is a way to add your interest to the property as it is mortgaged. A solicitor could advise you of this but the lender would hold the first charge.

To get a mortgage of £70k (existing £60k plus £10k to buy out the boyfriend) she would need an income of around £17-£18k and no other debts which presumably is much higher than her part time job gives her. They may waive the penalty if the mortgage is just changing names from joint to sole but if it was in the boyfriends name it will be treated as a completely new mortgage and the penalty would stand. Really she needs to find a full time job to make this work.

xyz123

I will be quite surprised if boyfriend only really wants £10k back. Surely he will want equity in the house.

If you are sure, is it an option that you can add yourself to mortgage making to affordable. There are two things re affordability, one is being able to pass stress tests to get a mortgage in sole name.. Second is actually affording monthly payments.. You can perhaps help in first case and may help in short term with second one if she can get fill time job in future..

Other option is if you live close by help with childcare and she can get full time job.. No easy answers here...

Cacran

I thinks that her boyfriend will want more than the 10k too. They are not speaking to each other at the moment even though they are both in the same house. She doesn't earn enough to get a mortgage. She is trying to get more hours at work or to diversify into something else. She is throwing all sorts of ideas at us and it is making me very concerned about the situation. I think she is going to have to calm down before making any rash decisions. Kids, who'd have 'em?

Cacran

We have decided that we will fund the house purchase.
The mortgage she has is in joint names as I said before. If he agrees to having his name taken off it , perhaps they would waive the £2900.00 fee if we guaranteed that , we would pay it for her, should she not be able to make payments.
It all hinges on whether he accepts the return of his deposit £10,000 like he has said he will.
We will have to wait and see about that. He does not speak to her at all, he has managed to alienate himself from all her friends and he only has one friend. A very strange guy, always been bad mannered and does not engage with other people. Goodness knows why she was ever with him. I know she thought he had problems and that she could help and you can't put an old head on young shoulders. She certainly know how to pick them! She is such a lovely girl and brings our Granddaughter up, so well. She is quite able to live by herself.