Splitting up, co-owning house

direstraits5

Hi, I'm in a position where me and my partner might be splitting up. We co-own the house and mortgage is up for renewal at the end of January.

Just wondering if I leave and let her stay in the house, what's the fairest way of doing things - I still pay half of the mortgage and she pays all the bills?  I want to take responsibility for my part of the house, but I don't know if paying half is appropriate if I'm not living there.  Just wondering what people usually do.

Emmia

You're jointly and severally liable for the joint mortgage, can she afford the mortgage alone plus the bills? I think if you can afford it, you should pay half. But if either of you stop paying, the bank can pursue either of you for the full mortgage amount.

What's the long term plan? Will the property need to be sold?

_Penny_Dreadful

direstraits5 said:

Hi, I'm in a position where me and my partner might be splitting up. We co-own the house and mortgage is up for renewal at the end of January.

Just wondering if I leave and let her stay in the house, what's the fairest way of doing things - I still pay half of the mortgage and she pays all the bills?  I want to take responsibility for my part of the house, but I don't know if paying half is appropriate if I'm not living there.  Just wondering what people usually do.

The sensible thing would be for one of you to buy the other out or for the two of you to sell the property.  If you don't the property will become a millstone around your neck.

kimwp

If you move out, capital gains tax will be applicable from that point. You'll also have stamp duty at the second house rate if you buy another house (and affordability for that will be affected by your mortgage obligations on this house)

RAS

CGT becomes an issue 9 months after someone ceases to use the property as their primary residence.

Exodi

Emmia said:

You're jointly and severally liable for the joint mortgage, can she afford the mortgage alone plus the bills? I think if you can afford it, you should pay half.

I disagree - presumably he will have housing costs associated with wherever he plans to move.

While true they are severally liable for the mortgage, you could argue that as he is a co-owner and she is living in (half) his house, she should be paying him rent for half the house - or effectively his half of the mortgage. If she thinks it's fair for you to pay half the mortgage while not living there or can't afford the mortgage on her own, suggest that she moves out instead.

They need to settle ownership on the house, either through a transfer of equity (buying the other person out) or selling the house and splitting the equity as soon as possible.

Being tied to a mortgage with an ex long-term is a disaster. I wonder if the OP will feel so warm on the idea of paying half the mortgage when she's met someone else and has moved him in. In situations where someone does (naively) subsidise the mortgage of their ex, we see a common trend that the ex starts becoming reluctant on the idea of selling down the road - and why wouldn't they, it's quite a cushy arrangement for them.

The big caveat to all of this is if children are involved, where I can at least understand why you might want to subsidise the mortgage.

Emmia

Exodi said:

Emmia said:

You're jointly and severally liable for the joint mortgage, can she afford the mortgage alone plus the bills? I think if you can afford it, you should pay half.

I disagree - presumably he will have housing costs associated with wherever he plans to move.

While true they are severally liable for the mortgage, you could argue that as he is a co-owner and she is living in (half) his house, she should be paying him rent for half the house - or effectively his half of the mortgage. If she thinks it's fair for you to pay half the mortgage while not living there or can't afford the mortgage on her own, suggest that she moves out instead.

They need to settle ownership on the house, either through a transfer of equity (buying the other person out) or selling the house and splitting the equity as soon as possible.

Being tied to a mortgage with an ex long-term is a disaster. I wonder if the OP will feel so warm on the idea of paying half the mortgage when she's met someone else and has moved him in. In situations where someone does (naively) subsidise the mortgage of their ex, we see a common trend that the ex starts becoming reluctant on the idea of selling down the road - and why wouldn't they, it's quite a cushy arrangement for them.

The big caveat to all of this is if children are involved, where I can at least understand why you might want to subsidise the mortgage.

I think there is also an argument for how long the covering will persist for - to the end of the fix is one thing, ongoing is another... And how the mortgage has been previously funded - 50/50 or some other breakdown?

zedonk

_Penny_Dreadful said:

The sensible thing would be for one of you to buy the other out or for the two of you to sell the property.  If you don't the property will become a millstone around your neck.

Completely agree with this. 

However, when I split with my ex we were in negative equity so neither of those things was an option. We agreed that I would pay the mortgage since I'm the one still living here. My ex is renting so CGT hasn't been an issue.

_Penny_Dreadful

Emmia said:

Exodi said:

Emmia said:

You're jointly and severally liable for the joint mortgage, can she afford the mortgage alone plus the bills? I think if you can afford it, you should pay half.

I disagree - presumably he will have housing costs associated with wherever he plans to move.

While true they are severally liable for the mortgage, you could argue that as he is a co-owner and she is living in (half) his house, she should be paying him rent for half the house - or effectively his half of the mortgage. If she thinks it's fair for you to pay half the mortgage while not living there or can't afford the mortgage on her own, suggest that she moves out instead.

They need to settle ownership on the house, either through a transfer of equity (buying the other person out) or selling the house and splitting the equity as soon as possible.

Being tied to a mortgage with an ex long-term is a disaster. I wonder if the OP will feel so warm on the idea of paying half the mortgage when she's met someone else and has moved him in. In situations where someone does (naively) subsidise the mortgage of their ex, we see a common trend that the ex starts becoming reluctant on the idea of selling down the road - and why wouldn't they, it's quite a cushy arrangement for them.

The big caveat to all of this is if children are involved, where I can at least understand why you might want to subsidise the mortgage.

I think there is also an argument for how long the covering will persist for - to the end of the fix is one thing, ongoing is another... And how the mortgage has been previously funded - 50/50 or some other breakdown?

What does the current breakdown matter if the ex will have the whole use of the property whilst the OP has to pay living costs elsewhere?  Are you proposing that the OP pays 50% of the mortgage and the ex pays 50% of the OP's new living costs e.g. rent so that the status quo is maintained?

Emmia

_Penny_Dreadful said:

Emmia said:

Exodi said:

Emmia said:

You're jointly and severally liable for the joint mortgage, can she afford the mortgage alone plus the bills? I think if you can afford it, you should pay half.

I disagree - presumably he will have housing costs associated with wherever he plans to move.

While true they are severally liable for the mortgage, you could argue that as he is a co-owner and she is living in (half) his house, she should be paying him rent for half the house - or effectively his half of the mortgage. If she thinks it's fair for you to pay half the mortgage while not living there or can't afford the mortgage on her own, suggest that she moves out instead.

They need to settle ownership on the house, either through a transfer of equity (buying the other person out) or selling the house and splitting the equity as soon as possible.

Being tied to a mortgage with an ex long-term is a disaster. I wonder if the OP will feel so warm on the idea of paying half the mortgage when she's met someone else and has moved him in. In situations where someone does (naively) subsidise the mortgage of their ex, we see a common trend that the ex starts becoming reluctant on the idea of selling down the road - and why wouldn't they, it's quite a cushy arrangement for them.

The big caveat to all of this is if children are involved, where I can at least understand why you might want to subsidise the mortgage.

I think there is also an argument for how long the covering will persist for - to the end of the fix is one thing, ongoing is another... And how the mortgage has been previously funded - 50/50 or some other breakdown?

What does the current breakdown matter if the ex will have the whole use of the property whilst the OP has to pay living costs elsewhere?  Are you proposing that the OP pays 50% of the mortgage and the ex pays 50% of the OP's new living costs e.g. rent so that the status quo is maintained?

Longer term the property probably needs to be sold and proceeds divided... Or one needs to buy the other out. The OP has decided to move out for whatever reason -  in the short term can the person remaining cover the mortgage/bills solo?

Both parties remain jointly and severally liable for the whole of the mortgage, if the person still living in the property cannot cover the mortgage (perhaps they don't work or don't earn enough... Perhaps they wouldn't be acceptable for private rent? Which is why the OP has moved out, as they are) The bank will come after the person who can actually pay - if that's the OP then they remain on the hook.