Helping daughter to stay in her home through her divorce

Jet

My step daughter is going through a divorce.  She lives in a mortgaged home that she shared with her ex who moved out last month.

My partner wants to try and help keep her in her home and is wondering if he can "take on" the ex's share of the mortgage as she can't afford the mortgage on her own? My thinking is that the current joint mortgage between SD and her husband will need to be repaid and then a new mortgage taken out in SD and partners name?  He already has a mortgage on a rental house he doesn't live in but has lots of equity in it as mortgage is only about 25% of value.

Her soon to be ex husband will need his share of equity from the house which is going to be around 10k depending on valuations.

I am not sure if this will work.  My partner is in his early 50's and won't be living there so will he need a buy to let mortgage? Whereas she wouldn't need it for her share of the mortgage?

Thoughts please?  

Thanks.

_Penny_Dreadful

This question might illicit better answers on the Mortgages & Endowments board.

Your partner wouldn't apply for a BTL mortgage because he's not buying to let.  Perhaps something like a joint borrower sole proprietor mortgage would work or jut a regular joint mortgage since the daughter will occupy the property.  Something to consider is that if your partner already owns property then buying out the ex's share will be subject to the higher rate of SDLT but this can be avoided if your partner is a legal but not beneficial owner of the property, something he would need to take professional advice about.

Has a financial settlement for the divorce been reached yet?  I wouldn't be keen to go arranging mortgage etc until I knew how much the ex-husband was due.

Jet

_Penny_Dreadful said:

This question might illicit better answers on the Mortgages & Endowments board.

Your partner wouldn't apply for a BTL mortgage because he's not buying to let.  Perhaps something like a joint borrower sole proprietor mortgage would work or jut a regular joint mortgage since the daughter will occupy the property.  Something to consider is that if your partner already owns property then buying out the ex's share will be subject to the higher rate of SDLT but this can be avoided if your partner is a legal but not beneficial owner of the property, something he would need to take professional advice about.

Has a financial settlement for the divorce been reached yet?  I wouldn't be keen to go arranging mortgage etc until I knew how much the ex-husband was due.

No financial settlement as yet.  Literally just thinking of options.  Will post on the mortgages board too.  Thank you.

thegreenone

Put Penny Dreadful's last para at forefront.

Would it be possible for your partner to remortgage his BTL and raise enough cash to gift his daughter enough to pay off ex plus money for her to get an affordable mortgage? 

If there are any siblings, I suspect this gift would need to be officially declared and his Estate/Will balanced up.

A friend and her parents were in exactly the same situation about 10 years ago.  

Jet

thegreenone said:

Put Penny Dreadful's last para at forefront.

Would it be possible for your partner to remortgage his BTL and raise enough cash to gift his daughter enough to pay off ex plus money for her to get an affordable mortgage? 

If there are any siblings, I suspect this gift would need to be officially declared and his Estate/Will balanced up.

A friend and her parents were in exactly the same situation about 10 years ago.  

That would be a big gift and currently would be most of his estate if he were to do this as he has very few other assets. There are 2 other siblings.  He will need to either sell or live in his current buy to let on retirement, so this would all need to be paid off in 15 years.

BrassicWoman

Do you have reason to think her income will go up drastically soon? If not - I'm not sure why keeping her in a home she cannot afford is a good thing?

Jet

BrassicWoman said:

Do you have reason to think her income will go up drastically soon? If not - I'm not sure why keeping her in a home she cannot afford is a good thing?

She would pay the same money if she were to rent albeit she might get help through universal credit with rent but not a mortgage. (She has a toddler). Like I say, just looking at options. 

Stateofart

Are you planning to take on the share of the mortgage but keep ex's name on it?  If so, this might get complicated down the line.  Really, if ex is washing his hands of it, he shouldn't be on the mortgage at all, especially if he isn't the occupier.  I would effectively buy the ex out and have a new mortgage, but like you say SD might not be able to afford it according to the lender.   You may wish to downsize.  A clean severance of the financials is a pain but worth doing now.

Exodi

Stateofart said:

Are you planning to take on the share of the mortgage but keep ex's name on it?  If so, this might get complicated down the line.

No-one (not even the OP) has suggested this.

Exodi

Jet said:

Her soon to be ex husband will need his share of equity from the house which is going to be around 10k depending on valuations.

I wouldn't think on further on this till you understand what the financial settlement will look like.

It's not uncommon that both parties feel they should be entitled to wildly different amounts. They need to thrash out all the finer details first (what happens with the furniture? what about the items that can't be removed from the house? etc).

Once a consent order has been signed, could the husband remortgage equity in his second property to pump into the SD's property - bringing down her mortgage payment in a remortgage situation (though obviously pay attention to potential ERC's).

He could then state this interest in the TR1, with the ex transfering his equity to the SD and husband as tenants in common. He could then just carry on paying the mortgage on the other property.

EDIT: on thinking on this further, there's the possibility that the lender would not be happy having a beneficiary on the deeds, but not on the mortgage. You'll need to speak to lenders to confirm their views on this.

Perhaps the best idea might be your first suggestion, having him effectively join her on the mortgage as a joint owner.

Jet

Stateofart said:

Are you planning to take on the share of the mortgage but keep ex's name on it?  If so, this might get complicated down the line.  Really, if ex is washing his hands of it, he shouldn't be on the mortgage at all, especially if he isn't the occupier.  I would effectively buy the ex out and have a new mortgage, but like you say SD might not be able to afford it according to the lender.   You may wish to downsize.  A clean severance of the financials is a pain but worth doing now.

No, we wouldn't want to keep ex's name on the mortgage.