Separated person buying second home

J

jbyrne

Guest
Hi, I have recently seperated from my wife but have not yet got a legal seperation. Due to the present house prices, i have decided to purchase a house and live in it alone (kids stay at weekends, etc). My wife will remain in the old house with kids (this house still in joint names). When i applied for a mortgage with AIB they said i must apply for a buy to let mortgage and will only lend 75% of house value. As i don't have 25% of the value in savings, it looks like i cannot buy.
Has anyone else experiened this? any suggestions on my options? Is there any other banks which would lend for prinicple resindence in this scenario or lend a higher amont for a buy to let.
Any help appreciated, thanks.
 
I'm surprised the bank is even prepared to lend you that much to be honest.

However my recommendation would be to get the settlement issues in regards to your marriage/separation sorted out first and you should then find yourself in a better position to purchase a house yourself.
 
Why would you be surprised, a mortgage is given based on income, expenditure and repayment amount. So if you have a large salary and low expenditure, they will obviously lend to you.
I wanted to take advantage of house prices at the moment, seperation takes a long time, hence the questions.
 
Thirsty's surprise is correctly based on how banks are presently behaving, and not on your erroneous supposition that if one "has a large salary and low expenditure banks will obviously lend to you" - which is based on what one supposes a bank would do in an ideal world which has long gone.

From what my property investing friends are telling me , even those with the best track records and with good security are having problems getting more than 75%.
 
You must remember you are liable in full for the outstanding mortgage on the "family" home at present so the Banks must take this into consideration.
 
Has anyone else experiened this? any suggestions on my options? Is there any other banks which would lend for prinicple resindence in this scenario or lend a higher amont for a buy to let.
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Old Nick & Dereko are correct in stating the approach by banks to this proposition. As long as you remain liable on the family home mortgage this is your PPR (per Bank policies) and a new property would come under buy to let policy. You may well find difficulties in meeting the net income threshold for a new mortgage as payments on existing loan will be factored in to the calculations. Probable best option for the present is rental.
 
Thanks for the replies.

Just to clarify my position. The bank have confirmed they WILL lend me 75% of the property value for investment purposes and they WOULD lend me 90% of the property value for PPR if i had a legal seperation, so the issue is not with the banks current lending policy, although i am aware bank are very tight at the moment. I can pay the existing mortgage (which is not that large) and a new one. My problem is that i don't want to take out an investment mortgage which has a high interest rate and only lends 75%. Seems strange that two people not living together cannot have two PPRs.
 
A married couple cannot have two PPRs, and without a Legal Separation (it does not have to be a Judicial Separation) you remain a married couple.

If the custody and access arrangements and financial arrangements have been agreed between you, such a separation can be done in weeks, and does not cost much.

Interestingly, although Revenue take this line for PPRs, it does not for the Single Parent Tax Credit, a bit of an analomy in the system.
 
jbyrne said:
Seperation takes a long time, hence the questions.
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Well it doesn't have to, not if the two parties are talking and in agreement. All you need is to agree and to sit down with a solicitor and draw up a legal separation.

In relation to your banking query, it seems the rule is that you have to have a legal agreement before they recognise you as a person in your own right. I agree it doesn't seem fair, would the bank accept a document from your solicitor stating that you are in the process of separating and therefore should be considered as individual households.

Do you have a copy of the bank rules on this, have you asked a higher authority, such as an ombudsman, have you asked your solicitor. What exactly did the bank write to you when they denied you the mortgage?
 
Just wondering is the real issue here the separation or the deed of waiver. When I separated and was seeking mortgage approval the bank was most interested in the paperwork which freed me from my obligations with regard to the family home ie. the deed of waiver and not the actual separation agreement, although elements of that were obviously important.
Do you think the bank will be willing to take your name off the deeds of the family home, if that's what you intend i.e. is your wife's income enough to satisfy them that the mortgage will be repaid? You say you have enough income to pay both mortgages, which I assume is your intention.
I hope I'm not overcomplicating things jbyrne but I suppose I'm wondering is the real issue around not giving you a PPR mortgage the fact that you have continuing obligations relating to that mortgage rater than the fact that you're not formally separated?
 
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