Potential breakup when owning as Joint Tenants

fiwen30

Posting here rather than in Relationships, as I think it's more numbers/facts based, but can cross-post if need be.

My boyfriend and I bought our first house in November 2020, as joint tenants. The house was 115k, and we each contributed half of the 15% deposit (about 8.6k each). Since we bought the house, we've combined all our income and paid out bills, expenses, spending, and savings, from the 1 pot of money - so we've technically each paid 50% each of the mortgage payments too. We've made 10 mortgage payments of £361 since then, so I think it's right that we still owe about 94k on the house?

After a couple of months of feeling that something was wrong, boyfriend admitted that he's been having severe mental health trouble, which is causing him to have doubts about all aspects of his life - including our relationship. He's not rushing into any decisions until he's sought professional help, but I'm trying to prepare for any eventuality.

Would I be correct in thinking that if we sold the house for the same 115k, 94k would go to the bank to pay off the mortgage, and we would each walk away with 10.5k (minus EA & conveyancing fees)?

We got our mortgage on a combined income of approx 28k/year. Since then I've taken a new job earning 20k/year, before tax.

Rent prices & housing availability have skyrocketed in the last year. I've no debt apart from our mortgage. How likely do you think it might be that I could be eligible for a mortgage in my name, and how much might that be (or is it an 'how long is a piece of string?' question?)?

Would this have to be on a new property? I had assumed so, but I'm unsure as to how the 'buying out' process works?

Any light which could be shed on these questions would be greatly appreciated. As said, we're not rushing into anything and are very much still a couple, but I also want to be prepared, for my own peace of mind.

MaryNB

You need to consider the ERC as well. With £20k you're looking at a mortgage of £90k plus your deposit of £10.5k (minus legal fees, ERC etc). You wouldn't have enough to cover the property assuming the value is £115k.

If you get funds elsewhere (e.g.gifted deposit) to buy him out, or the value has dropped, you can avoid EA fees but you'll probably need to pay a solicitor to make sure it's all done correctly. If you sell and buy another property you'll have to cover EA fees for marketing your existing property and selling and purchasing legal fees (and surveys costs if needed). Your £10.5k deposit will reduce fairly rapidly and you'll quickly be in the 95% mortgage bracket. You may need to looking at properties selling for something near £95k.

fiwen30

MaryNB said:

You need to consider the ERC as well. With £20k you're looking at a mortgage of £90k plus your deposit of £10.5k (minus legal fees, ERC etc). You wouldn't have enough to cover the property assuming the value is £115k.

If you get funds elsewhere (e.g.gifted deposit) to buy him out, or the value has dropped, you can avoid EA fees but you'll probably need to pay a solicitor to make sure it's all done correctly. If you sell and buy another property you'll have to cover EA fees for marketing your existing property and selling and purchasing legal fees (and surveys costs if needed). Your £10.5k deposit will reduce fairly rapidly and you'll quickly be in the 95% mortgage bracket. You may need to looking at properties selling for something near £95k.

This is great, thank you!

There won't be any influx of surprise, bonus, or gifted monies, unfortunately. Are 95% mortgages still a thing now? I know we bought among COVID, but it was difficult enough to find 90% mortgages at the time, which is how we ended up with an 85% one.

I had ball-parked my own affordability around the 80k mark, but wasn't sure how realistic that sum would be. With 1 income, and no other financial safety net, I wouldn't want to stretch myself too thin.

The cold, hard, truth is that 80k won't buy me a house half as lovely as ours; but that a mortgage payment on an 80k property would be around £300, whereas to rent the same property would currently cost around £500-600.

If it comes to it, to try and buy a cheaper house seems like a no-brainer, rather than trying to get into renting again?

MaryNB

If you are happy to live in the house for a few years it's a good idea. If you buy with the plan to upsize again next year (if, for example, you are expecting a pay increase then) it may not be worth it since you'll pay all the fees again.

95% mortgages are back. About this time last year I think all but maybe two lenders we only doing 85% or below. Lenders have since relaxed their lending criteria. Since you'll be close to the bone and stuck with the higher interest rates that come with 95% mortgages  it might be worth talking to a broker to get yourself the best deal.  

theoretica

fiwen30 said:

Posting here rather than in Relationships, as I think it's more numbers/facts based, but can cross-post if need be.

My boyfriend and I bought our first house in November 2020, as joint tenants. The house was 115k, and we each contributed half of the 15% deposit (about 8.6k each). Since we bought the house, we've combined all our income and paid out bills, expenses, spending, and savings, from the 1 pot of money - so we've technically each paid 50% each of the mortgage payments too. We've made 10 mortgage payments of £361 since then, so I think it's right that we still owe about 94k on the house?

You probably owe more than that as a fair portion of the payments you have made will be interest.  It should say on your mortgage statements what you owe and any early repayment charge.  You will also need to pay an estate agent and conveyancer for selling.  So, I am sorry but you may not even get your £8.6k back in full if the house price has stayed the same.

fiwen30

theoretica said:

fiwen30 said:

Posting here rather than in Relationships, as I think it's more numbers/facts based, but can cross-post if need be.

My boyfriend and I bought our first house in November 2020, as joint tenants. The house was 115k, and we each contributed half of the 15% deposit (about 8.6k each). Since we bought the house, we've combined all our income and paid out bills, expenses, spending, and savings, from the 1 pot of money - so we've technically each paid 50% each of the mortgage payments too. We've made 10 mortgage payments of £361 since then, so I think it's right that we still owe about 94k on the house?

You probably owe more than that as a fair portion of the payments you have made will be interest.  It should say on your mortgage statements what you owe and any early repayment charge.  You will also need to pay an estate agent and conveyancer for selling.  So, I am sorry but you may not even get your £8.6k back in full if the house price has stayed the same.

That’s also true, thanks! Will take a look over our mortgage document and recrunch the numbers to get a better idea of what we might each come away with.

fiwen30

MaryNB said:

If you are happy to live in the house for a few years it's a good idea. If you buy with the plan to upsize again next year (if, for example, you are expecting a pay increase then) it may not be worth it since you'll pay all the fees again.

95% mortgages are back. About this time last year I think all but maybe two lenders we only doing 85% or below. Lenders have since relaxed their lending criteria. Since you'll be close to the bone and stuck with the higher interest rates that come with 95% mortgages  it might be worth talking to a broker to get yourself the best deal.  

Thanks for the tip re. 95% mortgages, I’ll do a bit more research.

If we did end up breaking up and selling the house, I can’t imagine I’d want or need to be moving again soon after. It seems an obvious thing to buy again, rather than pay extortionate rent, now that I have a bit of financial stability on my own. Of course, I won’t be able to afford something as comfortable, or in as nice a location, as our current house, but at least it would be my own!

TripleH

Check for early redemption penalties on your mortgage (if it is fixed rate) as well.

boxer234

What a difficult time for you.  Does he have anywhere to go could he move out as a trial separation before you sell up? 

chrisw

It might be worth you talking to a mortgage broker. 

If you take along your current mortgage and wage details they should be able to advise what's available to you so you can assess your options.

saajan_12

fiwen30 said:

Posting here rather than in Relationships, as I think it's more numbers/facts based, but can cross-post if need be.

My boyfriend and I bought our first house in November 2020, as joint tenants. The house was 115k, and we each contributed half of the 15% deposit (about 8.6k each). - does that include costs (eg solicitors, surveys etc) or did you split those separately to the 8.6k each? 
Since we bought the house, we've combined all our income and paid out bills, expenses, spending, and savings, from the 1 pot of money - so we've technically each paid 50% each of the mortgage payments too. We've made 10 mortgage payments of £361 since then, so I think it's right that we still owe about 94k on the house? - no, most of that will be interest. Check what yours is, but at say 3% interest on a 97.8k mortgage is ~£245 a month. That leaves £1160 capital paid over the 10 months, ie still owe ~96.6k. Then there might have been fees added to the mortgage and Early repayment charges if you cash in, so could end up owing more than the original loan given its been such a short time.  

After a couple of months of feeling that something was wrong, boyfriend admitted that he's been having severe mental health trouble, which is causing him to have doubts about all aspects of his life - including our relationship. He's not rushing into any decisions until he's sought professional help, but I'm trying to prepare for any eventuality.

Would I be correct in thinking that if we sold the house for the same 115k, 94k would go to the bank to pay off the mortgage, and we would each walk away with 10.5k (minus EA & conveyancing fees)? - also minus ERCs, so I'd expect ~£0

We got our mortgage on a combined income of approx 28k/year. Since then I've taken a new job earning 20k/year, before tax.

Rent prices & housing availability have skyrocketed in the last year. I've no debt apart from our mortgage. How likely do you think it might be that I could be eligible for a mortgage in my name, and how much might that be (or is it an 'how long is a piece of string?' question?)? - speak to a broker, anything we can say would be way too speculative 

Would this have to be on a new property? I had assumed so, but I'm unsure as to how the 'buying out' process works?- if you + partner agree to a price, then you can apply for a mortgage yourself for that property and then get the property transferred into your sole name. That would save removals, some survey costs (beyond what the lender wants), EA costs, etc as you already know the property. 

Any light which could be shed on these questions would be greatly appreciated. As said, we're not rushing into anything and are very much still a couple, but I also want to be prepared, for my own peace of mind.

Given its been such a short time, financially this may be tricky as the fees may outweigh any equity gained. However hopefully the details in line above help to clarify.