Selling house because of separation and having debt.

mallen

Hi all,

I am currently separated from my wife and am wanting to sell the house and split the funds. 

The house is worth around £290k and I have £185k outstanding on the mortgage and around £25k of credit card and loan debt. 

My issue is I want to use the funds from selling the house to clear all family debt then split the rest between us allowing me to purchase another property. This existing debt is affecting my new mortgage applications. 

Are there any lenders that will accept the debt with the understanding or a contract in place that it will be paid off with the old house funds? I am trying to find anyway to avoid going into rented accommodation after the sale.
Thank you. 

user1977

I think this is pretty normal. Have you actually tried looking for mortgages already and had trouble because of this?

Chemistry777

I had a small amount of unsecured debt and on my mortgage offer (nationwide) there was a special condition that the debt would be cleared before the new mortgage commenced and that it was fine to clear the debt using equity from the sale of my exists home.

RAS

It all depends on the financial settlement associated with your divorce. The starting point is 50:50 but that would include the house, debts and savings plus pensions and other assets. If there are children, it's more complicated.

Have you started mediation and filed the relevant financial disclosure forms?

mallen

House is all in my name as is all the debt. Hoping to sell before divorce and sort 50/50 which has been agreed. 

I’ll call my mortgage lender later today to discuss. 

fewcloudy

mallen said:

Are there any lenders that will accept the debt with the understanding or a contract in place that it will be paid off with the old house funds? 
Thank you. 

Would it maybe be better to speak with a mortgage broker rather than just contact your current mortgage lender later today, as current mortgage lender will only tell you what they will do?

RAS

mallen said:

House is all in my name as is all the debt. Hoping to sell before divorce and sort 50/50 which has been agreed. 

I’ll call my mortgage lender later today to discuss. 

That's not relevant.

Unless this is a short marriage (around 5 years including living together prior to marriage), everything is an asset of the marriage.

Obviously, if you sell prior to divorce, that leaves you open to further discussions about assets as part of the divorce settlement.

pinkshoes

mallen said:

Hi all,

I am currently separated from my wife and am wanting to sell the house and split the funds. 

The house is worth around £290k and I have £185k outstanding on the mortgage and around £25k of credit card and loan debt. 

My issue is I want to use the funds from selling the house to clear all family debt then split the rest between us allowing me to purchase another property. This existing debt is affecting my new mortgage applications. 

Are there any lenders that will accept the debt with the understanding or a contract in place that it will be paid off with the old house funds? I am trying to find anyway to avoid going into rented accommodation after the sale.
Thank you. 

It would be best to speak to a mortgage broker.

£290k selling price, then less £185k mortgage and £25k debt leaves £80k equity, which you seem to have agreed to split equally, so you will have a £40k deposit for another house and no remaining debts.

Does your wife have any debts that will also need to be paid from the mortgage?