Mortgage, Divorce and Savings

AnonAndOn

Hi - didn't know where to post this one so please feel free to move me, Admins, if you think I should be somewhere else!

Right - please be kind on this one. I've changed my username as it's a bit sensitive and I've had such an awful couple of years (even beyond all the Covid stuff) that I'm bursting into tears left, right and centre and am feeling fragile. It's also likely to be a long one - sorry!

So, I am married, 2 kids in school, work part time on average OKish pay, husband works FT on a low wage, we have a mortgage on a pretty cruddy little house. Last year my husband and I separated but are both still living in the same house. He doesn't want to move out. I don't either. We want to put the kids first but I'm not sure how tenable this situation is long term. He's not keen on the idea of divorce but I think it's something that is looming. Right, the money bit.

I really don't know what to do with the mortgage and our financial situation. I've already reduced our mortgage rate considerably and reduced monthly payments, fixed into a 5 year deal.  I inherited some money that is sitting in an account in my name. I'm trying not to use it but it's not earning much. I could ALMOST pay our mortgage off with this money and some other savings but it would leave NOTHING left over. The house needs quite a bit of work doing to it but, Covid, so not been able to get anything done so I'm scared at the thought of using all the money to pay off the mortgage. I'm also aware that if/when we split, he will get 50% of the house. But then he would probably be entitled to 50% of these savings anyway?? Having savings also means I wouldn't be entitled to any benefits etc if I end up going it alone and my pay alone just wouldn't stretch quite far enough to run this house and support the kids alone. 

So I suppose my question is, how do I best use this money? Pay off most of the mortgage and just try not to worry about all the work that needs doing, knowing he'll be entitled to half the house? Pay some of the mortgage off, use some money to get the jobs done that need doing and then be able to claim UC when I'm a lone parent as will have no savings? Another solution? FINFO, the inheritance is approx 66% of my remaining mortgage. The other savings I don't have full autonomy over as they're technically joint. I've only recently got myself out of debt after a lot of hard work so having some money behind me feels like a miracle and I'm almost scared to lose it as it feels like a safety net but I really don't think sitting here with my head in the sand is the best solution. 

Thanks for reading x

tacpot12

Unfortunately, because you are married, it is likely that your savings would have to be split with your husband.

What to do with the savings probably depends on what is going to happen to the house. if you used half your inheritance, could you take over the mortgage based on your part-time income? This is a question you need to ask your lender, but it would also make sense to ask them (assuming you fail to qualify currently), how much more of the inheritance would you need in order to qualify - if you need just a few thousand pounds more, your husband might be prepared to give you this in exchange for something else. However, your husband would also be entitled to half the equity you have in the prioperty, and with house prices rising, out might have more equity now than you had in, say, December of last year. You might need to give him some your inheritance (over an above the share he is entitled to, as a way of giving him the equity in the house that is his).  

One thing that couples often forget about is the value of their work/private pensions, which can be very valuable and can be quite unbalanced. If your husband has more pension entitlement than you do, you could agree as part of your financial settlment that he will let you keep more of your inheiritance in exchange for him keeping all his pension entitlement. This could allow you to take on the mortgage when he cannot afford to do so. 

He can't expect to stay in the house if he can't take on the mortgage and/or have the children living there most of the time.

If you use all of your share of the inheritance to allow you to take over the mortgage, your first priority should be to rebuild your savings so you have a bit of an emergency fund.  Then you need to make sure you are contributiong as much as you can to your pension, but these are issues for a later stage.

You might want to get some relationship councelling, either on your own or with your husband, to help you decide if divorce is the only/best option for you. A mediator might help you broker a finacial agreement that a solicitor can then formalise via a court order.

It will also be very worthwhile developing a budget for yourself (both pre and post divorce) so you can see the impact of the divorce. You  should be entitled to child maintenance if you stay in the house and have the children with you, and this child maintenace does not affect you rights to benefits.

You can use the benefits calculator at Entitledto.co.uk to check what benefits you might receive post-seperation.  
 

Thrugelmir

Speak to a family law solictor. You need to understand your personal position properly. The courts primary concern and legal duty is for the welfare of the children. By default the court will assume guardianship of the children and represent their interests , irrespective of the views of the warring parties. A secure home for them will be top of the agenda.