Helping out family

Mrs_pbradley936

Well they are getting valuations this week to take into account the current downturn in property values The house was bought about 16 or 17 years ago the full price being 52K and they bought a half share hence the 26K mortgage. The ex-husband’s share will be 25% of the current market value well at least I think it will, less any costs incurred. So if the value is 170K and they own half that is 85K minus the mortgage of 26K means a total of 59K which divided by 2 comes to 29.5K for the ex- husband and my son’s now partner.

If it was just him I doubt very much that we would step in but they have a child together and that matters to us. I shall want to be satisfied that my son cannot be thrown out if they split up in future and it turns out that we have bought a house for a stranger!! But provided the solicitor can works something out which is legally binding and meets our needs I think it is a small price to pay for such peace of mind. We are going along the lines of it being paid back at around £380 per month (figure taken from a mortgage calculator today’s rates and 25 year span) and if it is in arrears or not paid back then that will mean that his inheritance will be 56K less than it would have been.

hollydays

There are many Fathers who would not have wanted to pay the mortgage on the house for the child of 15.Bearing in mind he has supported the child thus far,would he be prepared to continue paying the mortgage given the extenuating circumstances(just a thought)

Mrs_pbradley936

hollydays wrote: »

There are many Fathers who would not have wanted to pay the mortgage on the house for the child of 15.Bearing in mind he has supported the child thus far,would he be prepared to continue paying the mortgage given the extenuating circumstances(just a thought)

No such luck! They are all perfectly amicable but the ex-husband has someone else and wants to buy with her.

Biggles

Mrs_pbradley936 wrote: »

Well they are getting valuations this week to take into account the current downturn in property values The house was bought about 16 or 17 years ago the full price being 52K and they bought a half share hence the 26K mortgage. The ex-husband’s share will be 25% of the current market value well at least I think it will, less any costs incurred. So if the value is 170K and they own half that is 85K minus the mortgage of 26K means a total of 59K which divided by 2 comes to 29.5K for the ex- husband and my son’s now partner.

I assume you mean the valuation of the house is £340k, of which his partner and her ex own £170k?

But what's happened to the 17 years of paying the mortgage? If it was a repayment mortgage, there won't be anything like £52k still owing. If it was an interest-only mortgage, what repayment vehicle were they paying into (maybe an endowment if in 1991??), and what value does that stand at?

Mrs_pbradley936

Biggles wrote: »

I assume you mean the valuation of the house is £340k, of which his partner and her ex own £170k?

But what's happened to the 17 years of paying the mortgage? If it was a repayment mortgage, there won't be anything like £52k still owing. If it was an interest-only mortgage, what repayment vehicle were they paying into (maybe an endowment if in 1991??), and what value does that stand at?

No,no the price of the house now is in total 170K so they own half of that less the mortgage. They had a valuation a few months ago and it was 190K but prices are dropping and the agents have said 160 to 170 for a sale in today's climate and they are waiting for that in writing.

Biggles

Mrs_pbradley936 wrote: »

No,no the price of the house now is in total 170K so they own half of that less the mortgage. They had a valuation a few months ago and it was 190K but prices are dropping and the agents have said 160 to 170 for a sale in today's climate and they are waiting for that in writing.

Now I am confused.

So, the partner and her ex own £85k (between them) and the HA owns £85k?

So the ex is owed £85k / 2 = £42,500?

The thing I'm having trouble with is that the husband's equity is, you say, £42.5k - £13k mortgage = £29.5k.

If he has been paying a mortgage for 17 years, why is he happy to have the whole £13k deducted from his equity? Was it an interest-only mortgage? How were they planning to pay for the house at the end of the mortgage (presumably in only 8 years' time? And why to you need to pay the partner the whole £26k on top of what the ex needs?

Is there something you don't know about? Or just something I don't know about? Sorry if I'm missing something obvious.

moanymoany

Don't act as guarantor - you could end up paying the mortgage. If you want to help them with a deposit, that's one thing. Otherwise let them stand on their own two feet.

He is old enough to father a child, he is old enough to support it.

Keep your money for your own old age. You've done your stint at bringing up a family, it is for your son and his partner to do their stint.

Mrs_pbradley936

Biggles wrote: »

Now I am confused.

So, the partner and her ex own £85k (between them) and the HA owns £85k?

So the ex is owed £85k / 2 = £42,500?

The thing I'm having trouble with is that the husband's equity is, you say, £42.5k - £13k mortgage = £29.5k.

If he has been paying a mortgage for 17 years, why is he happy to have the whole £13k deducted from his equity? Was it an interest-only mortgage? How were they planning to pay for the house at the end of the mortgage (presumably in only 8 years' time? And why to you need to pay the partner the whole £26k on top of what the ex needs?

Is there something you don't know about? Or just something I don't know about? Sorry if I'm missing something obvious.

You are right with the figures up to a point.

They have 85K as does the Housing Association. But there is also a 26K mortgage which has to be settled so if you take 26 from 85 you end up with 59 and if they divide that between them it is 29.5 that each of them have as equity. That is the method the HA said they should use.

Biggles

Yes but, without wishing to labour the point (though I obviously am!), how much of the £26,000 mortgage is still outstanding?

This point seems to have been glossed over but is obviously a very important part of the sum.

Mrs_pbradley936

Biggles wrote: »

Yes but, without wishing to labour the point (though I obviously am!), how much of the £26,000 mortgage is still outstanding?

This point seems to have been glossed over but is obviously a very important part of the sum.

Right I see your point now. The 26K is what is remaining, they originally borrowed more than that. I am sorry I did not make that clear at the start. I do not know the original price when they bought it 16 or 17 years ago but they bought a 50% stake they HA owns the other 50% and they pay a low rent about £100 per month on that but that was about £40 per month when they first bought the house.

Edit to add: I know I said earlier that the house cost 52K but I was mistaken.