Buy-out Separated Wife From House

Gmitch2000

My wife wants to separate, but I want to keep my son in the house.

 She has agreed to me buying out her equity.

 The problem is that the value of the home has increased quite a lot, so I cannot get a mortgage high enough by my income multiple.  I have done sums about what I can comfortable afford to pay back each month.

 I would like to get a second charge mortgage to cover the balance of my wife’s equity.  However some companies say that she has to be off the land registry first, which cannot happen as I need to second charge mortgage to buy the balance of her equity.

 I have an older retired relative that would also be willing to let me use equity in their house.

 It is affordable to keep my son and I in our home but it is frustrating that I cannot get the process in the right order to buy out my wife.

 What can I do?

MWT

As far as I am aware, a 2nd charge mortgage still has to use the same sort of affordability calculations as a normal mortgage so if you are failing on that already, going for a 2nd charge isn't going to help...

Using your elderly relatives property as security wouldn't help, but doing an equity release could get the funds you need, but that is a very big ask...

Removing your wife from the deeds shouldn't be an issue as long as you time things so it all happens on the same day, that is essentially no different to any house sale where the current owners are removed and the buyer added on completion...

Anyway, wait for one of the brokers ot comment, they may have a better answer for you...

K_S

@gmitch2000 How far off are you on affordability on a standard resi mortgage? What's the house value, total mortgage size required, your income and age? You may have options to borrow more than you think you could.

gizmo111

Have you taken advice on splitting finance - as with a child involved it may not be as simple as a 50/50 split of the house - all assets, pensions etc need to be considered.

Caz3121

Gmitch2000 said:

My wife wants to separate, but I want to keep my son in the house.

 She has agreed to me buying out her equity.

how old is your son? if you are going to be the primary carer then you may want to look at the possibility of a mesher order where the child stays in the home and the non-resident parent receives their share after a certain trigger point...eg child turns 18, you remarry etc
What other assets are there? the equity of the property gets added together with savings pensions etc less debts and divided from that point so may be possible to offset some other assets so you get more of the house and less of everything else.
It is no uncommon for the parent with care to receive more than 50% of the pot in a divorce.
If you were to be buying her out you would be looking for a mortgage for the current mortgage amount plus her share of equity (whatever that may work out as) Some lenders may take child maintenance into the affordability calculations...again depend on age of your son...may be one for a broker.

Gmitch2000

@K_S The value has risen to £550 - 600k.  I need to borrow £344k to pay off the current mortgage (£139k) and my wife's equity (£205k).   I would have £205k equity left as well.
My current lender offered £235k over 26 years at 1.99%, but this leaves me £110k short.
My income is £46k per annum before bonus and I am 43.  I calculate my bills before groceries to be £452 per month, so I would be very comfortable to pay a £1,500 mortgage a month and have spare to save with.  I have the frustrating scenario that the monthly bills are affordable but due to the salary multiple I cannot borrow the required amount from my current lender.
Thank you for your help!

K_S

@Gmitch2000 What's the last two bonus amounts? And I assume you're receving child benefit for your son as well?

Gmitch2000

Hi the bonus is around £4k per year and there is child benefit but he will be splitting his time 50/50.

Gmitch2000

@K_S My wife now earns about £10k a year more than I do if that has any impact?  I really would like to be able to do use the equity that I have in the house to borrow enough to buy her out

K_S

@gmitch2000 Your wife's income is immaterial in this buyout scenario as your earnings need to meet affordability (as per lender calculations) to borrow 344k. As things stand, it falls well short unfortunately.

Thrugelmir

Have you sought advice from a family solicitor?  The primary concern of the courts is the welfare of any children involved. The court naturally assumes their guardianship and puts their interest first, the warring parties are secondary.  Far from unusual for one parent to remain in the family home until all the children have left full time education. At which point the property is then divided in accordance with the financial consent order agreed at the time of divorce.