Divorce and keeping the family home

ToughTimes1

Hello all. Seeking advice on the following please:

Family home worth c.450k. Remaining balance 150k so c.150k of equity each in the property.

I want my wife to at least have the option to stay in that home should she choose to. This would mean a debt of 300k when my half is paid out to me. 

The timing is terrible with the rates situation but it is what it is. The reality is that an interest only mortgage would be the only realistic way she could afford to stay in that house as the interest alone will be c.1500 a month at present rates.

The dilemma on my mind is that my mortgage provider stipulates that one of us must earn 75k minimum to have an interest only mortgage. I earn above that, she does not.

If she decides she wants to stay, is the best way to do this by switching to interest only while I am still a co-owner, remortage to remove my equity, then transfer full ownership to her later. 

General affordability isnt a major issue but presume the bank wont be interested in her business if she is the sole owner at 300k debt, even if I give her sufficient money every month to cover all the costs.

Any guidance or alternative suggestions are very welcome and appreciated, Thanks. 

DE_612183

I would have thought that when you transfer ownership to her, she'd need to take out a new product anyway - so the stumbling block would still be there.

Earning £75k for a mortgage of £300k is 4 times the salary - which is I guess where they get their figure from.

ToughTimes1

DE_612183 said:

I would have thought that when you transfer ownership to her, she'd need to take out a new product anyway - so the stumbling block would still be there.

Earning £75k for a mortgage of £300k is 4 times the salary - which is I guess where they get their figure from.

Thank you. Do you think her parents offering a guarantor basis would be a realistic option?

MWT

What would she use as a repayment vehicle to cover the £300k at the end of the mortgage?

... and is your current lender willing to consider interest only with a 66% LTV?

ToughTimes1

MWT said:

What would she use as a repayment vehicle to cover the £300k at the end of the mortgage?

... and is your current lender willing to consider interest only with a 66% LTV?

Inheritance. It will be significant. Unsure if that is considered viable by a bank?

sammyjammy

ToughTimes1 said:

MWT said:

What would she use as a repayment vehicle to cover the £300k at the end of the mortgage?

... and is your current lender willing to consider interest only with a 66% LTV?

Inheritance. It will be significant. Unsure if that is considered viable by a bank?

Not a chance, anyone can change their will at any time or even spend every last penny!

MWT

ToughTimes1 said:

MWT said:

What would she use as a repayment vehicle to cover the £300k at the end of the mortgage?

... and is your current lender willing to consider interest only with a 66% LTV?

Inheritance. It will be significant. Unsure if that is considered viable by a bank?

No, and with 66% LTV with only £150k equity I'm not sure the numbers will stack up to use downsizing either...

Here is an example of the conditions for one lender...

https://www.ybs.co.uk/mortgages/interest-only-new-customers

Newbie_John

ToughTimes1 said:

MWT said:

What would she use as a repayment vehicle to cover the £300k at the end of the mortgage?

... and is your current lender willing to consider interest only with a 66% LTV?

Inheritance. It will be significant. Unsure if that is considered viable by a bank?

Not really sure if you're in you 20s or 60s but if there is already talk about inheritance - an option would be that parents/grand parents could sell their place now and move in together? 

Keep_pedalling

As any divorce financial settlement includes all assets including pensions, assuming you have a greater pension provision than her, could you not take less equity from the house in exchange for her taking a smaller share of your pension?