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Nominada
Posts: 10 Forumite
Hi there! I’ve got a situation I’m ill equipped to plan out well.
I’m 31. I have what Is considered a ‘perfect credit score’... it is because of my credit score that we were able to secure a good mortgage rate. My partner and I bought a house together earlier this year (we have been together 10 years) but now, due to a whole plethora of unfortunate events and realizations, we are going to be breaking up (this discussion has not yet occurred). But we will be.
So. It was a 270k house. We put down 152k. Most of of it was my fianc!’s money, I paid about 1/3 and he paid 2/3 of the deposit. We both agreed we would each pay half in the end. Mortgage payments are less than a normal person’s rent, especially when you consider we pay half each. We also split utilities 50/50. In total we each contribute about 630 (combined is 1260) a month, but that includes our share of taxes, utilities, and mortgage. It’s a good location for both our works, and we work from home. The title is joint and we both own 100%. He purchased all new appliances at his preference (though it shows up in the paperwork that I paid half on card, it was from his money). We repainted the walls. We installed hardwood. He paid most of the costs, again.
Decent sounding investment if it worked out, right?
Fast track to now. We have a cohabitation agreement signed where either one of us can end things at any time and we choose to sell the house or not (to each other or to someone else). Profits are split 50/50 after deductions — if you were paying attention, that means I come out ahead since he paid 2/3 and i paid 1/3. However That would require trying to sell the house ‘earlier than intended’. We have a three year mortgage contract with 2.5 years remaining. I’m not sure if the bank would allow us but we could also consider renting. Point being: I am unsure which path is more intelligent from a financial and personal perspective.
I intend to live abroad in mainland europe, but also return to our home city as I have work in both locations. Currently our home acts as a studio for both of us. I am also looking for a permanent studio on the mainland (rent or buy, undecided).
Is it wiser to be cordial and pay our fees till we re-mortgage the house in 2.5 years and then sell/rent it and owe less? We could one or both of us use the house as studio space till then (if both, this would mean a messy break however).
Is it wiser to make a deal with my soon to be former partner and have him buy me out at what I put in, providing he promises to pay all mortgage and monthly fees from them on? This would be a clean break but I do not see the investment gain here.
Is it wiser to consult our lending bank and ask if selling immediately/renting immediately is ok? This would mean a loss of studio space and require us to move completely.
Force a Sell, or rent, or endure?
Perhaps there is another option I’m not considering? I do not think he would be open to accepting a roommate in order to pay the house off faster. However we can make lump sums to our mortgage and get it whittled down quick if we want to. I personally do not have the funds, but he does.
I have 11.5k in savings.
I also borrowed 11.5k from our ‘cash’ which then technically I owe him... but it’s not something that has a paper trail. However he will be upset if I don’t pay it back so I will.
If you consider that, I have no savings.
Seeking advice of the financially astute and heart-conscious. I want to move on. It’d be easier with a nest egg (but I think I could save funds and create a tidy sum if I just hold off on the breakup a little longer).
Thoughts? Thank you!!
I’m 31. I have what Is considered a ‘perfect credit score’... it is because of my credit score that we were able to secure a good mortgage rate. My partner and I bought a house together earlier this year (we have been together 10 years) but now, due to a whole plethora of unfortunate events and realizations, we are going to be breaking up (this discussion has not yet occurred). But we will be.
So. It was a 270k house. We put down 152k. Most of of it was my fianc!’s money, I paid about 1/3 and he paid 2/3 of the deposit. We both agreed we would each pay half in the end. Mortgage payments are less than a normal person’s rent, especially when you consider we pay half each. We also split utilities 50/50. In total we each contribute about 630 (combined is 1260) a month, but that includes our share of taxes, utilities, and mortgage. It’s a good location for both our works, and we work from home. The title is joint and we both own 100%. He purchased all new appliances at his preference (though it shows up in the paperwork that I paid half on card, it was from his money). We repainted the walls. We installed hardwood. He paid most of the costs, again.
Decent sounding investment if it worked out, right?
Fast track to now. We have a cohabitation agreement signed where either one of us can end things at any time and we choose to sell the house or not (to each other or to someone else). Profits are split 50/50 after deductions — if you were paying attention, that means I come out ahead since he paid 2/3 and i paid 1/3. However That would require trying to sell the house ‘earlier than intended’. We have a three year mortgage contract with 2.5 years remaining. I’m not sure if the bank would allow us but we could also consider renting. Point being: I am unsure which path is more intelligent from a financial and personal perspective.
I intend to live abroad in mainland europe, but also return to our home city as I have work in both locations. Currently our home acts as a studio for both of us. I am also looking for a permanent studio on the mainland (rent or buy, undecided).
Is it wiser to be cordial and pay our fees till we re-mortgage the house in 2.5 years and then sell/rent it and owe less? We could one or both of us use the house as studio space till then (if both, this would mean a messy break however).
Is it wiser to make a deal with my soon to be former partner and have him buy me out at what I put in, providing he promises to pay all mortgage and monthly fees from them on? This would be a clean break but I do not see the investment gain here.
Is it wiser to consult our lending bank and ask if selling immediately/renting immediately is ok? This would mean a loss of studio space and require us to move completely.
Force a Sell, or rent, or endure?
Perhaps there is another option I’m not considering? I do not think he would be open to accepting a roommate in order to pay the house off faster. However we can make lump sums to our mortgage and get it whittled down quick if we want to. I personally do not have the funds, but he does.
I have 11.5k in savings.
I also borrowed 11.5k from our ‘cash’ which then technically I owe him... but it’s not something that has a paper trail. However he will be upset if I don’t pay it back so I will.
If you consider that, I have no savings.
Seeking advice of the financially astute and heart-conscious. I want to move on. It’d be easier with a nest egg (but I think I could save funds and create a tidy sum if I just hold off on the breakup a little longer).
Thoughts? Thank you!!
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Comments
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If he can afford to buy you out and have the house and mortgage tranfered into his name that will be the best option.0
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Urban can afford to buy me out, yes — if you suggest that, should he buy me out at half the appraised current value (as if I had sold my half share) or at what I contributed?0
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If you bought the house this year, and seek financial separation immediately, you're really looking to be put back in the position you were in before you bought it (less any costs). Any change in value isn't worth worrying about.
How much is your early repayment charge?0 -
I would say one third of the amount the house is worth now, with maybe a little extra on top for the extra sixth of the mortgage you have been paying above your share. Utilities etc it is fair that you both paid the same (if we are going down the clinical route)“Quis custodiet ipsos custodes?”
Juvenal, The Sixteen Satires0 -
If he can afford to buy you out then that is your best option.
If not, then it would be better to sell in the long run.
I personally don't think you would be able to properly move on if you are still tied into the house.
It is a tough situation and I completely sympathise
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Urban can afford to buy me out, yes — if you suggest that, should he buy me out at half the appraised current value (as if I had sold my half share) or at what I contributed?
I want to check what you mean when you say he can buy you out.
You say the house was worth £270k and you put down £152k, so you have a mortgage for £118k.
1/3 of the deposit was yours so that's £51k.
To buy you out, you need to come off the mortgage and receive your deposit (or whatever you decide) back from him.
That means he has to either pay in cash or remortgage on his own for £118k (paying off existing mortgage) plus £51k (to you) = £169k plus any fees such as the early redemption cost.
However you say that your credit record was the reason you were able to get the mortgage you currently have. Therefore does he really have the means to raise £169k by mortgage as a sole applicant and/or using cash he already has? He would need to look at affordability for this himself and with his own credit rating.
I cannot think that so much has changed in less than a year with his credit record that, if yours was crucial at the time of purchase, he can do it alone now. But this depends on what was wrong with his credit record. Was it simple lack of history ie he hadn't had credit cards etc before? Or have there been defaults that will need to drop off in due course? If so, if you wait the remaining 2.5 years for the ERC to go away, is it likely his credit record will have significantly improved by then?
Sympathies also, this sounds like a very difficult situation.0 -
I’m not sure offhand how much the repayment charge would be ... but perhaps it’d be possible to do an under the table payment where I wipe my hands if it and he takes full payment upon himself?0
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I’m not sure offhand how much the repayment charge would be ... but perhaps it’d be possible to do an under the table payment where I wipe my hands if it and he takes full payment upon himself?
Then your ex has the upper hand. No guarantee that they will sell up or remortgage. Simply remain in situ.0 -
So rather than have him pay me a fixed amount and do what he wants with the house till remortgaging... you suggest any of these options?
1. Selling it (there'd be a prepayment penalty).
2. Letting one party live in it but take over all expenses except 1/2 the mortgage. Both names remain on the deed until mortgage re-evaluation or a sell
3. Pay off mortgage as much as one can, and rent the property out meanwhile. After a few years sell the house. Means being tied to your ex in a landlord partnership for the duration of the ownership.0 -
Thank you -- it is tough. I am OK if he were to buy me out, though not sure how complicated that is.
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