Separated with mortgage of 180k

TMurray2019

Registered User
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10
Hi all,

I'm a guy in my late 30's, was married with kids but split-up 5 years now.
I built a house in 2008 with my ex-partner and we separated in 2014.
Since 2014, my ex left the home and I stayed on in the house and kept up mortgage repayments. Currently, there's 185k left on the mortgage.

She is now looking for me to either; sell the house or buy her out.
I really don't want to sell as it was built on a small piece of family land available.
The only piece of land my family had, not from a farming family with tons of acres or anything like that.

I looked at remortgaging but as my salary is approx 40k after tax so I'm not earning enough to remortgage and pay a lump sum to buy her out.

Could I be forced to sell the house? The kids stay with me a lot, about 50% of the time, so it's still their home for half of their lives and so there's a lot of emotional attachment there for everyone.

The house value is approx €250k, but once selling fees etc come into place I guess we might be left with around 25k each if it was sold? So selling is not going to lead to a lot of cash for either of us.

Any ideas what the outcomes or options are? I spoke to two advisors to get their opinions on the situation and ended up getting completely opposing views from both. One said sell up and move on, the other said stay and keep the home. So the internet is my third option! :)

If I sell up, I'll just have to look for another house within 10 mins away to suits school for the kids (there is a real shortage of houses available as its a rural area), with maybe 25k each in the bank afterward, it seems like madness to me to sell the home to gain that figure.

Any advice, thoughts or help really appreciated.
And apologies for the long-winded post.
 

Brendan Burgess

Founder
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38,704
House value €250k
Mortgage: €180k
Equity: €70k
Salary : €40k after tax

You refer to being married and having an ex-partner. I presume it's the same person?

Do you have a separation agreement?

Are you divorced?

How much is she earning?

I would argue that you took over the house in 2014 when there was no equity in it. So there is nothing due to her now.

She will argue that she has a 50% stake in the house.

Does she want to buy another house herself? What is her income? Her name on your mortgage probably means that she will not be able to get another mortgage.

If she does not want to buy another house, then maybe she just wants the €35k equity in the house. Have you any way of raising this?

If she renounces her right to the house and you take over the mortgage, then you could pay her €35k. But this would not affect her liability to the bank for the mortgage if you don't pay it. So she might not be happy with that.

It would be legally difficult and expensive for her to force you to sell the house.

Brendan
 
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TMurray2019

Registered User
Messages
10
Hi Brendan,

Thank you for the detailed reply. I really appreciate you taking the time to give such a detailed response.
Yes, the reference to being married and an ex-partner refer to the same person.

We are separated, have a child maintenance agreement in place, divorce proceedings are in progress.
Her income is approx 16k per year (working part-time).
She also gets FIS, rent allowance, children's allowance, and maintenance payments, total income approx 38k.

Yes, she says she wants to buy another house, but I'm not sure if she just wants the equity.
Would she get a mortgage on those earnings?
Is an individuals' salary the only income taken into account - or are the other incomes listed above considered for a mortgage application?

Some reassurance to know it would be difficult and expensive to force to sell the house, thanks for that! : )
It's the kids home after all – if the tables were turned I don't think she would be forced to sell the house either.

She has basically requested to either sell the house, or have her name removed from the mortgage, but in doing removing her name - would expect a payment to have her name taken off.

I'm not currently in a position to raise 35k. I could possibly get close to 20k of a credit union loan but remortgaging isn't an option on my current salary (according to the financial advisor I spoke with). Hopefully may be an option in a few years as I improve my career prospects.

Would the fact that the house is now in positive equity be a positive factor to remortgage?

Thanks again for the help and advice.
 

Brendan Burgess

Founder
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38,704
What is your salary before tax?
Assuming it's €50k or so, I don't think that you would get a mortgage from another lender with your maintenance payments.

She certainly will not get a mortgage so is not currently affected by having her name on the mortgage. This would change if her income increased or if she was jointly buying with someone else. Is she in another long-term relationship where they might have discussed buying a house together?

I would argue that this issue should be resolved as part of the divorce settlement.

The main factor affecting your chances of a remortgage is your income.

But your current lender has two names on the mortgage. So if you don't pay, she is liable for it. They are unlikely to give that up unless you are very comfortably able to pay.

Have you spoken to your lender? That would be the first step.

Brendan
 

Brendan Burgess

Founder
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38,704
I did a very simplistic calculation: She is entitled to half the house.

But how was the house funded in the first place?

Can you argue that you provided the site worth €80k.

Or did your parents gift the two of you the site?

Brendan
 

NoRegretsCoyote

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918
@TMurray2019


She is already housed via rent allowance. There is no way she would get a mortgage on that level and type of income.

I think she just wants the equity.


Do you have a tracker mortgage? It would be a big loss to you (and by extension her) for you to lose that.
 

TMurray2019

Registered User
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Thank you both for the replies, again it is really appreciated.

@Brendan Burgess to answer your questions:
- My salary is approx 50k before tax yes (maintenance payments circa 7k and mortgage repayments are 11k per year - so remortgage unlikely I imagine)
- Yes, she in another relationship and I think may be looking for the money to help fund a new house
- Yes that's the plan to get this all sorted as part of the divorce settlement
- The house build was funded entirely by this mortgage
- My parents gifted the land, so no payment was made for the site (I'm unsure if it was officially gifted to myself or us both in the legal papers, ill follow up with the solicitor on that tomorrow).
An advisor did tell me that my family could, in turn, be due repayment from any sale of the house if that was ever forced to sell.
This would wipe out any equity then I imagine? Would that scenario be correct?

@NoRegretsCoyote yes, currently on a tracker mortgage - so to lose that would be a nightmare.
Yes, I think just has her eyes on the equity and possibly putting that towards a house in the future if possible.

I just keep thinking, if she were in the house, there is no way I (as the father of the kids) would get away with asking the mother to sell and move out of the home.
There's a good chance I would still be required to pay a large part of the mortgage if the tables were turned.
 

Brendan Burgess

Founder
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38,704
Hi T

Did you have no deposit at all?
Was the entire mortgage drawn down for the build?

If your family gave you a gift, it would have been unconditional. So it's very unlikely that anything is due back to the donor unless they made it a condition of the gift.

You could make a case that you contributed the deposit i.e. the value of the site, and she contributed nothing. She would counter argue that she got a gift just like you did.

Was the site in your name alone?



Brendan
 

Brendan Burgess

Founder
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38,704
- Yes, she in another relationship and I think may be looking for the money to help fund a new house
They probably won't give her partner and her a mortgage while she already is named on one. So that might be her primary concern.

But it's hard to know.

Brendan
 

Brendan Burgess

Founder
Messages
38,704
Have you a friend or a family member or a partner who could replace her on the mortgage?

The lender might go for that. Unlikely but worth a try.

Which lender is it?

Brendan
 

dmos87

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Messages
407
This may or may not have any bearing but something to be aware of, and it might be different based on what payments she is on. I have a sibling in a similar financial situation as your ex wife (in receipt of social welfare payments listed above and working part time). All of those payments are assessed based on savings. From my understanding, should she exceed 20k in savings her payments would be cut off until she comes under that amount (FIS and Rent Allowance).

Now, that being said, you mentioned she has a partner and is probably keen to purchase a home with them. If thats the case and she even moves this person in to her current home, she would lose FIS and Rent Allowance anyway, so this might not matter.

If she is simply looking for a cash payout and not to change her circumstances, it might be worth discussing with her that the 20k payout would retain her social welfare payments, any more and they would be lost.
 

TMurray2019

Registered User
Messages
10
Thanks @Brendan Burgess
There was no deposit - entire mortgage used to fund the build. I don't think there were any conditions in the gift of the site - will look into that though. I'm not sure yet if the site is in my name only or both names, I will check this out straight away with my solicitor too. Thanks for that prompt. I do have a financially secure family member that would possibly go onto the mortgage as a guarantor / replacement name - it is with Ulster Bank. Will look into this also. May be worth suggesting to the bank as an alternative option.

Thanks @dmos87 - I wasn't aware of that at all, thanks a lot for the information. I had no idea moving a new person into her home would mean losing FIS and rent allowance too. That would be a huge move and the loss of circa 15k per year for her I think. Appreciate all the information.
 

dmos87

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407
I'm not 100% certain on that, please check social welfare listings to see the rules etc and have this clarified, don't take my word for it. I do know for my sister, anything over 20K in savings is seen as means. She might not lose all of the payment by having someone move in, but the amount she receives would of course change as they would be joint assessed for Rent Allowance and his wage would be taken into consideration. The same would apply for FIS. Together their earnings could be greater than the cap for FIS and Rent Allowance and if so, THEN they would lose the payment.


http://www.citizensinformation.ie/en/social_welfare/social_welfare_payments/supplementary_welfare_schemes/rent_supplement.html#l1f4da

http://www.citizensinformation.ie/en/social_welfare/social_welfare_payments/social_welfare_payments_to_families_and_children/family_income_supplement.html#l1f4da
 
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NoRegretsCoyote

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@TMurray2019

I can't offer any advice on the legal aspects of the divorce or indeed title.

All I know is a solution that involves keeping the tracker mortgage is essential. Your solicitor needs to understand this, and make sure that her solicitor understands it too.

If I read it right with your tracker you are servicing a €187k mortgage for 11k a year with 15 years to go. Imagine you had to sell up and start again most likely you would not get a tracker. For 11k a year if you had my rate (2.9% fixed) you would only manage a mortgage of about €134k. This is a loss of €50k that you both have to share.

First you and her have to make sure the pie is as big as possible, and then decide how to divide it. Selling the house and losing the tracker will only make the pie smaller and both of you worse off, no matter how you divide up the proceeds.

The best of luck!
 

TMurray2019

Registered User
Messages
10
Thanks, @NoRegretsCoyote – I hadn't considered the situation in that manner. I don't see my ex being too concerned with the tracker mortgage aspect now, but of course, I am fully and ill do whatever I can to hang onto that. Thanks for your input and advice, much appreciated.
 

Muddle2018

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Messages
53
Have you actually asked the bank if they could do a transfer of equity? Even contact them and fill in the standard financial statement and see what they say. Under normal circumstances you would not get a mortgage of that amount with your wages but they will allow for proof of historical payments. I am going through a TOE at the moment on a similar amount of mortgage and I earn less than you do but they are considering it due to the proof that I have been the sole person to pay the mortgage since my ex left. It is worth a try.
 

RETIRED2017

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770
out of interest how much have you paid off the mortgage on your own in the last five years,I would say quite a lot,
In other words you need to know how much you paid off mortgage in the last five years if it is 180 K now you have more than 35K paid off which needs to be taken into account ,
How much was the mortgage five years ago you would have to be allowed for the amount you paid down on your own I think,
I suspect there is very little to buy out unless she also has being paying down principle like you,
 
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TMurray2019

Registered User
Messages
10
Thanks @Muddle2018 - no I haven't asked for a TOE from the bank yet. That's the next plan of action, will be getting in touch with the bank tomorrow. Any advice on how best to go about that - face to face meetings, by phone or written as a formal letter? How did you go about it if you don't mind me asking? Hopefully, it will work. And best of luck with the progress on your own situation : )

@RETIRED2017 - thanks for that - yes there has been mortgage repayments I think in the region of 50k over the past 5 years since we have separated, and these have all been made by me. Cheers for that suggestion.
 

RETIRED2017

Frequent Poster
Messages
770
You need to go back and have a look at how much of the 50K is interest how much is actual paydown of the mortgage in other words how much was the mortgage when she stopped paying,

You should take her at her word and get house sorted out now, best for both of you to do so,

Both of you having close to 80K in income between you, now is the time to sort this out,
 
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