Where to get divorce financial advice (and reality check)

Twighlightyears

Hi, my wife and I are considering separating/divorce-  age 55 and 56. Both with non resident adult kids from previous relationships. We both work full-time earning £38k and £54k and have a house with a £140k repayment mortgage and likely equity of another £140k. We both pay extra into public sector pensions as we came together and began careers in early 40s. No savings worth a damn. 

The reality check is that I’m not sure we can afford to separate unless we sell and each rent cheap. That said some one has suggested you can qualify for help to buy even late in life if the pension will pay enough. Fortunately all kids are provided for already so a life of rent or owning a house that mainly goes back to the bank on death isn’t terrible but home ownership and stability would be preferable.

does this sound like a pipe dream and if not then where to go for financial advice? Would any IFA be appropriate or do we need a specialist to look at pensions, implications for claims on each other’s, alongside getting a sense of whether anyone would lend us anything. 

FWIW credit history is fine, jobs are stable. No credit card debt. I owe £14k on a PCP car which I’d pay off with equity.

Thanks in advance.

tacpot12

So if you sell the house, you and your wife will have around £70K equity to buy somewhere else, and both of you need somewhere to live. You should be able to find somewhere to buy, but your ages will work against you when looking for a mortgage. 

I doubt that even the person with the higher salary would be able to buy out the other person as this would mean increasing the mortgage by £70K, but if your existing lender will allow this, this could solve the problem for one of you. 

You probably need a mortgage borker more than you need a financial adviser, to see how you both can be housed. 

You might not need to do anything about the pensions if you both agree that your respective pension provisions are already adequately equal. Only if there is an imbalance would you need a pensions specialist to work out how to equalise your pension provisions. A Pensions Sharing order can only ordered by a court, so you would need to find out how to get one of these and what financial analysis would be required. A solicitor specialisting in divorce would be able to tell you what you need to do, and who might be able to do the analysis for you. The firms that do this will generally know exactly what the court wants to see, so will be able to do the work that is needed, for a price. 

If you do decide to sell the house, it would seem to make sense to look to get divorced and get a "clean break" order if you can do so. Such an order means that neither of you has any further claim on each others assets, so you need to have agreed what is going to happen about your pension provisions before this order can be made.

Paying the car off with equity needs some thought. You need to work this into your budget. Making a budget is a good place to start - again, you don't need an IFA to do this. You just need to make a list of the all the unavoidable costs you will have as a single person and estimate what these will be. When I got divorce, I did this and found that we couldn't afford to seperate either - it's not unusual to find this. However, there was no way that we could carry on living together, so we agreed that we would share the pain equally - both of us would have not quite enough to live on, but we would make it work. I moved to the cheapest bedsit I could find and started to rebuild from there.

CottonTail

You guys have decent wages and a small mortgage so my question is where is all the money going?
You will need to look very hard at your current outgoings/lifestyles as they are due a downgrade sadly if the reality is you are selling up/moving on.
Would be good to get both of you in strong positions for applying for single mortgages. You should be able to get a 250k mortgage over 20 years via a good mortgage broker.

CottonTail

PCP car I would hand back at the mid term tipping point and lease a cheap car with a new warranty instead. DO NOT USED EQUITY for this. You will need cash for for moving costs/deposits/stamp duty etc.

Clueless56

I think it probably depends on how much properties cost in your area.  I took on a mortgage at 57 with a deposit of c40% and was earning about £31k p/a at the time.  The term runs until I'm 75 and I had to prove I will have sufficient income in retirement, which was helped by my having DB pensions.  An independent mortgage broker will be able to help you.  There are a couple of mortgage brokers that post on the Mortgage board that would be able to give you some general information but best to see a broker locally for more specific advice  about your own situation.  

Twighlightyears

Thanks all. A mortgage broker is the next step then who I assume can make sense of likely pension income as we’d have to be able to make it work in our retirements. 

TBagpuss

Yes, looking at house prices and speaking t a mortgage advisor are your next steps.

You should probably also get up to date pensions information - bear in mind that if you chose, you can take a lump sum form your pension when you retire so you could look at taking out a part interest only, part repayment mortgage with a view to clearing the capital on the interest only element using the lump sum, when you retire, for instance.

It's also worth thinking hard about your housing needs and priorities - for instance, if you had to chose, would you chose to rent a house or buy a flat? Rent in the area you prefer or buy somewhere that might be less convenient or immediately appealing?

I'd also sit down and look at your outgoings - do a fairly detailed list so you can see where your money is going - you're both on relatively high salaries and while of course you're free to spend as you go on things you enjoy, you may decide that it's worth while cutting some of your costs in order to be able to save a larger deposit or afford a bigger mortgage (while you don't have a lot of debt, you might find the debt boards quite useful if you do want to look at your spending and ways you might be able to cut it)

Thrugelmir

At least working in the public sector your jobs are secure for as long as you wish. Speak to a mortgage broker and ascertain your options.