Went to see a mortgage advisor, but still confused?

SecondStar · 4 November 2022 at 11:44AM

We’re in Northern Ireland.

I’ll try to be succinct.

I’ve been thinking about breaking up with my partner (unmarried). We have a house we bought together as joint tenants in Nov 2020, we each paid 50% of the deposit/buying costs - 10k each. We each have 4k cash savings.

We still have 95k left on the mortgage. The house was purchased at 115k, and could sell for maybe 117k based on local selling prices of same properties over the last 2 years.

I went to see a mortgage advisor yesterday to get more information about my housing options.

My salary before tax is 22.4k, and I have no money owed. My max borrowing amount would only be 100k - 95k to pay off the mortgage, 5k to give to him.
I’d need to also give him all my 4k cash savings, plus find 1k to round up his money, plus 50% of the ERC and 50% of the solicitors fees (around 1k, total).

In short, to buy him out I’d need to borrow 2k just to cover the costs (and I’ve no one who could loan that sort of money to me), and then I’d be left penniless, albeit with a house.

The advisor’s opinion was to either suggest he buys me out (would be the same as above for him, as we earn the same salary, and have the same amount of savings, and I don’t think he has anyone who could loan that money either), or put it on the open market and sell.

If we sold for 117k, that would be 95k to pay off the mortgage, 1k for 1% ERC, 1.5k estate agent fees (1%+VAT), 1k solicitors fees; leaving about 9k each.

Now my questions -

Now, the advisor seemed to think that the best thing for me to do would be to have the house sold on the open market, and then to consider co-ownership on another property??

From whatever calculations she was doing, she was saying that a 90% LTV on my max borrowing amount of 100k, would work out around the same monthly mortgage cost as a co-ownership mortgage on a 120-130k property?

My initial, uneducated reaction to hearing this was ‘I don’t need or want a 120-130k house’. ‘She’s on some sort of deal, or commission, for co-ownership mortgages’. Followed by, ‘She’s a MORTGAGE advisor, she’s always going to try and sell me a mortgage product of some sort, and probably for as high a value as she can, rather than suggest that I move to rented property’.

Do these concerns seem unfounded, or do you think there may be some truth in these gut feelings?

For the record, I think my preference (since I can’t afford to buy him out) would be to have him buy me out/sell on the open market; then either rent somewhere for a year while I get my head straight and figure out what I want, and where I want to live; and if I were to buy, then I’d rather buy well within my affordability for the sake of security, and I’d look for a smaller, less desirable home, around 80-90k.

Basically I don’t know what to do, and I’d really appreciate some input from other adults, who may or may not know more about this than I do!

kingstreet · 4 November 2022 at 1:18PM

Co-ownership? You in N Ireland?

silvercar · 4 November 2022 at 1:32PM

First question is whether either of you want to live in the home once you separate. Then you can have a discussion about its value, some sort of allowance in your minds for not having estate agent fees or to pay a mortgage redemption penalty etc and see if you can make the numbers work.