Separating from partner - mortgage situation

TangoFiver

Hi all,

I recently found out that my wife has decided to pursue a relationship with another person.

Currently, my wife and I are still living under the same roof with our two young daughters.

The house is mortgaged under both of our names, and we have only a joint bank account where all our wages go in, and all the bills come out.

The plan is that she is going to leave and buy/mortgage a house with her new partner, whilst I am hoping to remain in the family home if I can afford to buy her out.

The children will spend 50% time with each of us.

The current mortgage deal (5 yr fix at 1.72%), is due to expire in June 2025, and will leave approx 30% of the current value of the property to pay on the existing mortgage.

So I believe that I'll need to apply for a mortgage to buy out her equity. 

I have about 3 months worth of bills etc in savings.

In terms of the affordability for me to do this, how can lenders get an accurate picture of what the spending will be? There will be half the number of adults, and effectively half as many children.

I could open up a single bank account for me now, but we are still jointly paying all the bills as we're still all residing in the house, so income and spendings would remain the same?

I also don't want to be applying for too many bank acounts mortgages etc, as the current deal expires in 6 months so have this to consider also.

(Apologies for sounding clinical, but the only way I can deal with this is on spreadsheets etc!)

TF

DE_612183

normally you fill out a list of your outgoings - you can put whatever figures you like in these - but if they are different to whats on the bank statements prepare to be challenged.

somethings make not change though - insurance , perhaps council tax etc - not everything is half - and a large % of utility bills can be fixed or standing charges so be prepared for that as well.

Ps - I love a spreadsheet!

saajan_12

Sorry to hear, and unfortunate timing too. 

In terms of the equity, the main thing to work out is how much you agree as her share in ££. That is based on 
(a) current valuation
(b) what % her share is (if its been a long term marriage with kids then the norm is 50%)
(c) how you split costs eg remortgage fees, stamp duty, etc

Is she looking to buy immediately or can she rent somewhere for a few months? Given your current rate is so low and only lasts another few months, hopefully if everyone can be civil and leave the mortgage as is it'll save some interest and repayment fees. 

You'd need to remortgage in the amount of the current balance plus whatever you pay her. Affordability wise, what is your income as a % of that remortgage amount? If the multiple is high enough then there might be less scrutiny on your exact expenses. Also on your current expenses but only your income, how much buffer do you have? As the expenses may not change *that* much - larger mortgage, council tax & utilities similar as its the same size house, food / clothing is treated quite variably anyway. 
Applying for bank accounts isn't going to affect your credit history assuming there's no overdraft and you leave credit cards alone. But regardless IMO its not worth the hassle both to open them and to later provide documents to your solicitor just to demonstrate expenses. 

TangoFiver

DE_612183 said:

normally you fill out a list of your outgoings - you can put whatever figures you like in these - but if they are different to whats on the bank statements prepare to be challenged.

somethings make not change though - insurance , perhaps council tax etc - not everything is half - and a large % of utility bills can be fixed or standing charges so be prepared for that as well.

Ps - I love a spreadsheet!

Thanks for your reply,

Sorry I should have said that I'm not expecting all bills to be halved, but some specific ones will surely be less...

...Council Tax is 25% discount, Groceries could be maybe 25% less also, and utilities as I wouldn't necassarily have the heating on as much when I'm on my own and I only have showers whereas she's always had baths etc).

When you say "prepare to be challenged" if the figures are different, if I can explain my reasoning behind these differences is this to a computer and/or a human? And how likely or not will they accept my reasoning? (I see it as perfectly reasonable reasoning!)

TF

DE_612183

TangoFiver said:

DE_612183 said:

normally you fill out a list of your outgoings - you can put whatever figures you like in these - but if they are different to whats on the bank statements prepare to be challenged.

somethings make not change though - insurance , perhaps council tax etc - not everything is half - and a large % of utility bills can be fixed or standing charges so be prepared for that as well.

Ps - I love a spreadsheet!

Thanks for your reply,

Sorry I should have said that I'm not expecting all bills to be halved, but some specific ones will surely be less...

...Council Tax is 25% discount, Groceries could be maybe 25% less also, and utilities as I wouldn't necassarily have the heating on as much when I'm on my own and I only have showers whereas she's always had baths etc).

When you say "prepare to be challenged" if the figures are different, if I can explain my reasoning behind these differences is this to a computer and/or a human? And how likely or not will they accept my reasoning? (I see it as perfectly reasonable reasoning!)

TF

Depends on the lender - when I did mine I had a "mortgage advisor" allocated to me - they came back with questions from the "underwriters" who you never get to talk to.

If you have logical reasoning it should be accepted - just don't try and take liberties to arrive at a affordability calculation that you want

born_again

I would open a sole account now.
Get your wage paid in their & then transfer 50% of the bills over. 
Reason is that you say you only have a joint account. If this goes into a joint account dispute due to the break up. Then you are stuck.
Also if other party decided to go wild they could empty it & leave you with nothing but debt.

DE_612183

born_again said:

I would open a sole account now.
Get your wage paid in their & then transfer 50% of the bills over. 
Reason is that you say you only have a joint account. If this goes into a joint account dispute due to the break up. Then you are stuck.
Also if other party decided to go wild they could empty it & leave you with nothing but debt.

that's good advice

ACG

Im assuming the others have answered but just incase...

Most mortgage lenders use ONS figures for affordability. If they are asking for bank statements, it is just to verify income and commitments. 

In terms of deposit, you wont need one, the equity will count as it. So if the house is worth £200k, you will have a £60k balance, presumably that means you need to raise another £70k to give to the ex, which means you would have a mortgage of £130k on a £200k property - £70k equity. Hopefully that makes sense.

It sounds like you are being amicable about it which is good. Your kids will get you through it. Best of luck. 

TangoFiver

saajan_12 said:

Sorry to hear, and unfortunate timing too. 

In terms of the equity, the main thing to work out is how much you agree as her share in ££. That is based on 
(a) current valuation
(b) what % her share is (if its been a long term marriage with kids then the norm is 50%)
(c) how you split costs eg remortgage fees, stamp duty, etc

Is she looking to buy immediately or can she rent somewhere for a few months? Given your current rate is so low and only lasts another few months, hopefully if everyone can be civil and leave the mortgage as is it'll save some interest and repayment fees. 

You'd need to remortgage in the amount of the current balance plus whatever you pay her. Affordability wise, what is your income as a % of that remortgage amount? If the multiple is high enough then there might be less scrutiny on your exact expenses. Also on your current expenses but only your income, how much buffer do you have? As the expenses may not change *that* much - larger mortgage, council tax & utilities similar as its the same size house, food / clothing is treated quite variably anyway. 
Applying for bank accounts isn't going to affect your credit history assuming there's no overdraft and you leave credit cards alone. But regardless IMO its not worth the hassle both to open them and to later provide documents to your solicitor just to demonstrate expenses. 

Sorry Saajan - I missed your reply yesterday,

She said she won't rent.

My income might be around 25% of the remortgage value - could I perhsps use savings to slightly reduce the remortgage value?

Her and her new partner have been looking at properties, and the new partners current house has sold (subject to contract).

In terms of when the equity will be required to be split/released (sorry don't know the correct term!), is there a timeframe for this to happen once Divorce has been processed through the legal channels? i.e is it before/during/after?

Buffer would be far less, so not much in the way of a buffer in the future

If I was to open a sole bank account now, the earliest my wages would be paid in to it would be end of Jan - so in the meantime would I be best to transfer my wages into the sole account less all the household bills etc?

She has opened a sole bank account and hasn't done anything with it yet, but I've asked her to have her work pay her wages into it from Jan.

Thank you all for the replies - feel like I'm struggling on all fronts at the moment so it's all much appreciated!

ian1246

Get your divorce application in now. Financial consent order will need to be done - after the interim divorce order is granted, which takes a few months from application.

Only once the Financial consent order is signed & authorised by the court is it legally binding. Up until that point your ex can change her mind and double cross you.

That means the optimum point for you to remortgage into just your name is a day after the financial consent order is authorised... releasing the equity to your ex-wife. Do not give her a £££ from the house until then.

Hence why you really need to have a look on the government website with regards to divorce & associated timescales, since if you get the application in soon it'll probably correspondence nicely with when your remortgage is due...

With regards to child maintaince, check their website. Provided its equal - not just in nights at each address, but day to day care (drop-off's/ pickups at School, doctor appointments, extra curriculum activities etc...) then legally your exempt from making payments.