Acrimonious Divorce and mortgage advice needed

Pocket_Rocket72

Hi I dont know if anyone can help - my partner is in the middle of a god awful divorce and I need some advice regarding a recent request regarding the mortgage on the property.

The house has been up for sale since April, but the ex has caused many issues with demanding it is put on the market above the valuation price and refusing to accept anything but the asking price. 

The market at the moment is not great and it really isn't getting any nibbles for viewings.

Their mortgage, which is a repayment mortgage, is coming out of the fixed term in January and now Satan has realised the monthly mortgage payments will increase (even though the solicitors have advised her previously to be mindful of this upcoming event).  My partner received yesterday a letter from Satans solicitors regarding the possibility of remortgaging with an interest only mortgage.  

I have been helping my partner with the divorce and solicitors correspondence as he isn't great with emails and admin type stuff, but this is above me not having a mortgage myself.  can anyone advise if this is possible, if it should be done and what ramifications we need to be considering.

For the record a financial agreement has just been agreed, but not yet gone through the courts and been "rubber stamped" to allow the divorce to be finalised.

Any advice would be appreciated. 

lisyloo

The main issue is that the capital won't be repaid. 
That might not be seen as an issue by the owners if they see this as a temporary situation.

What I'm not sure of (and maybe someone can advice) is whether an interest only mortgage without a repayment vehicle is likely to be given.

Mark_d

An interest-only mortgage is typically only given to high earners - maybe £75k+ and with a fair chunk of equity in the property.  To get an interest-only mortgage you also need to demonstrate a plan to build up sufficient capital to repay the loan by the end of the term.

I think any kind of remortgage is going to be a problem because a change of financial situation is expected imminently (the divorce), so the best option is likely to stay on the current lender's SVR.

I think it would be best all round if this property got sold quickly, although tbh I can't imagine it being sold now until Spring.  I think it can be argued in court that the ex is being unreasonable in insisting the property is sold at a price above the current valuation.

FlorayG

I can't help except to say that I wanted to purchase a lovely house but it was way overpriced. I offered a reasonable amount which was a bit over the local average and was told no. The estate agent told me the wife had moved out, the husband was still there and refused to agree sale at anything below the high price he had set - it was on the market for a long time during the period after Covid when properties were selling in 24 hours. I don't know what happened in the end, but I could tell how difficult this resident was making things. If people want to be difficult they can be. Sorry you're suffering this

Voyager2002

Pocket_Rocket72 said:

Their mortgage, which is a repayment mortgage, is coming out of the fixed term in January and now Satan has realised the monthly mortgage payments will increase (even though the solicitors have advised her previously to be mindful of this upcoming event).  My partner received yesterday a letter from Satans solicitors regarding the possibility of remortgaging with an interest only mortgage.  

I have been helping my partner with the divorce and solicitors correspondence as he isn't great with emails and admin type stuff, but this is above me not having a mortgage myself.  can anyone advise if this is possible, if it should be done and what ramifications we need to be considering.

Any advice would be appreciated. 

I would be inclined to respond by inviting the other party to obtain an offer of an interest-only mortgage and promising to consider it. Your letter might point out that the impending divorce is a significant financial change, and for this reason it is going to be difficult to obtain a mortgage offer.

MEM62

Pocket_Rocket72 said:

The house has been up for sale since April, but the ex has caused many issues with demanding it is put on the market above the valuation price and refusing to accept anything but the asking price. 

Pocket_Rocket72 said:

Their mortgage, which is a repayment mortgage, is coming out of the fixed term in January and now Satan has realised the monthly mortgage payments will increase (even though the solicitors have advised her previously to be mindful of this upcoming event).  My partner received yesterday a letter from Satans solicitors regarding the possibility of remortgaging with an interest only mortgage.  

I would view this as leverage to encourage the Ex to take a more amicable approach to proceedings.  If the new repayments are unaffordable for them then perhaps this is the motivation to finally push them to get on with the sale.     

Savvy_Sue

Mark_d said:

An interest-only mortgage is typically only given to high earners - maybe £75k+ and with a fair chunk of equity in the property.  To get an interest-only mortgage you also need to demonstrate a plan to build up sufficient capital to repay the loan by the end of the term.

It's POSSIBLE (although I'd say not certain) that 'selling the house' might be considered as 'the plan' to repay the capital. 

MobileSaver

Pocket_Rocket72 said:

My partner received yesterday a letter from Satans solicitors regarding the possibility of remortgaging with an interest only mortgage. 

Your partner would be mad to agree to this, all they will be doing is making it easier for the ex to continue putting obstacles in the way of selling it.

I agree with @MEM62, your partner should be using this as leverage to get the house sold and by far the best way to do that is to allow the repayment mortgage to continue at the higher Standard Variable Rate.

This will mean that the ex will soon discover there is (literally) a price to pay for them continuing to be unreasonable...

Exodi

Perhaps I'm misunderstanding the OP because I don't quite understand the replies.
It sounds like switching to an IO mortgage is intended to be a temporary measure while the house sells to reduce the immediate mortgage payments (especially with the upcoming hike to SMR). Both parties have likely already worked through the numbers and have a figure in mind for what they expect to receive, so from that perspective there's little motivation to continue to paying down the principal.

I'd hope that when speaking to a lender, they wouldn't need to demonstrate an investing strategy, they could simply explain that they intend to settle the balance with the proceeds when the house sells. Of course with any type of remortgage, they should consider ERC's. Personally if they can't stomach the SMR, they should consider a tracker (as this doesn't feature ERC's).

If it was me, I'd do everything I can to get the house sold before finalising the divorce. I'd also be upfront to their ex and their solicitor that it could be viewed  unreasonable that the ex persists in trying to sell the house above asking/valuation.

MobileSaver said:

Pocket_Rocket72 said:

My partner received yesterday a letter from Satans solicitors regarding the possibility of remortgaging with an interest only mortgage. 

Your partner would be mad to agree to this, all they will be doing is making it easier for the ex to continue putting obstacles in the way of selling it.

I agree with @MEM62, your partner should be using this as leverage to get the house sold and by far the best way to do that is to allow the repayment mortgage to continue at the higher Standard Variable Rate.

This will mean that the ex will soon discover there is (literally) a price to pay for them continuing to be unreasonable...

I'm in two minds about this.

On one hand I think deliberately ensuring the mortgage is charged at as high a rate as possible to force the outcome the OP wants is likely to make them no better than the ex they keep referring to as 'Satan'.

But likewise I agree with you and the other posts that should it be possible to move to IO, dramatically bringing down the mortgage payment, then it may mean the ex is even further motivated to drag their heels on selling the house.

I think as a start, the OP should talk to the lender and see if IO only is possible. If it's not then great news they can go back and genuinely inform the solicitor it's not possible. Of course of it is possible, they would be entitled to make their own decision on what to do and who to inform. But better to be armed with all the options.

MobileSaver

Exodi said:

It sounds like switching to an IO mortgage is intended to be a temporary measure while the house sells to reduce the immediate mortgage payments (especially with the upcoming hike to SMR).

Is it though? That's the million dollar question...

According to the OP the house has already been on the market for six months and the ex will only accept a price that's more than it's been valued at. Switching to IO so that the ex is immediately better off financially every month only encourages that unreasonable behaviour.

Exodi said:

I'd also be upfront to their ex and their solicitor that it could be viewed  unreasonable that the ex persists in trying to sell the house above asking/valuation.

There's no question, it is unreasonable, however pursuing that unreasonableness through the courts is a costly, stressful, time-consuming and slow process.

Sticking to SVR could be the pragmatic solution; the extra monthly costs of the higher rates are likely to be pocket change compared to the legal costs of going through the courts. 

Similarly the SVR will kick-in in January so there is a very short and definite deadline of just a few months before the repercussions of the ex's inactions come back to bite them.

The OP should reply to the solicitor with a very firm No and politely explain that the way to avoid the higher SVR is to market the property at the price valued by professionals and accept a reasonable offer before January...

Stateofart

This is the break you've need in focussing the mind of your ex.  Don't agree and warn them the best course of action is to try and sell before the SVR.