Ex-partner is wanting to sell the house.

[Semple]

Thanks for all the replies and continued discussion. There is a lot to quote and correct in lots of posts but having just got back from work now is not the time. There is more details I can give that I didn't really want to post but may have too. I shoukd have time before work later to reply.

@coolsurfer i don't play wow. Not for at least a year. I may have loaded it and played for an hour since but that's it. I don't play video games anymore not for a long time. Overtime is not an option a better paid job is what I have been trying to get since I was made redundant in 2015. I am vaping to help quit smoking. My repayment mortgage is over £1000 per month. Hence the interest only.

I can see why you're backed into a corner. That's a pretty insane amount to be paying for a mortgage on a house that's only worth maybe 140k/150k.

What are your plans in ~10 years when the mortgage is up and you need to pay off the full balance?

I really think you need to seek financial advise as well as legal advice about your situation. A solicitor will only be able to advise you what your ex can and can't do wrt to selling the house. A FA will be able to look at what's possible for you to do with the mortgage in the term left etc.

 

[dowie]

And I'm asking you how does a small amount of equity charge the situation in any way.

Well I'd assume it makes a new mortgage easier for a start, plus there is actually something there to buy her out of.

The problem for the OP is that he needs to force the bank to make a deal. Even if that's too switch it to himh and his wife and take the ex off it so how does he do that. The ex also needs this even if she doesn't know this yet.

Declaring yourself bankrupt doesn't magically force the bank to change the affordability requirements for mortgages, it is more likely to cause them to force the sale of the house. AFAIK having dependents etc.. can delay it for a year. This is sort of the opposite of what he wants to achieve, he can voluntarily sell it now if he wanted to, declaring bankruptcy to end up in a worse position (as now his credit rating is ****ed) doesn't make sense.

In fact if he's otherwise fine as far as debts are concerned and is otherwise happily paying this mortgage then it just makes no sense that he'd then become bankrupt???

If he wants to remortgage/buy out his ex then his wife needs to get a job and increase their household income so they can pass the affordability requirements.

 

[Freakbro]

Since the reason the ex wants to sell now is to get a lump sum out of this house to put towards a deposit for a new house then this below is what needs to happen

This is quite easy to sort

Get three independant valuations and an average of estate agents fees let's say 4% (free)
Get your latest mortgage statement (free), remember any ERC which could be a killer!!

Show your ex the total amount made from the sale (minus the 4%), then discount the mortgage. Split the equity 50/50 and tell her the sale from the house will net her £1,000 cash...OR, with the ERC she will actual be in debt

Things need to be presented in black and white at times like this. Speculation is nothing more than wasting time.

Then if it's shown there's no equity to be had, that alleviates the immediate issue of the ex forcing the sale. She may want to come off it anyway, but 12 years shows she's not been in a rush about that. It won't particularly stop her getting a second mortgage - you can have 2 residential mortgages - the main issue is the security of him defaulting, but like I said, doesn't seem she's been too worried about that so far.

Yep. Fool me for posting after reading the OP and not the rest of the thread.

And I really hope she does know it's been Interest Only since she moved out. If the OP has somehow managed to do that without her realising, I'd call that fraud.

He explained that too, it was a mortgage from Northern Rock and went interest only after they went bust. No fraud involved. My parents had the same with Bradford & Bingley. I ended up paying off the residual capital last year.

@Droolinggimp

You might want to read this article as it directly effects you.

https://www.bbc.co.uk/news/business-46821660

You may be able to have the house transferred into your name alone based on being a mortgage prisoner. I'd be contacting NRAM and your ex to let her know that they is the possibility you could buy her out in the not too distant future.

Yea, @Droolinggimp , if you can show there's genuinely no equity in the property and stop the ex requiring the sale this could be a massive lifeline for you.

 

[dl8860]

My repayment mortgage is over £1000 per month. Hence the interest only.

What is the approx. value of the property and your outstanding mortgage amount?

 

[dl8860]

double post

 

[dowie]

Yea, @Droolinggimp , if you can show there's genuinely no equity in the property and stop the ex requiring the sale this could be a massive lifeline for you.

But the ex-wants to buy a house herself, this at least has stamp duty implications for her no? If not also affecting how much she can borrow too?

Seems like the OP needs to sort himself out and get a new mortgage, buying out the Ex's share if required/applicable. Since his wife doesn't work then perhaps she ought to get a job and delay university so they can apply for a mortgage together if they want to secure the house they live in.

 

[DanTheMan]

It's a tough situation but I would definitely use it to get to a position whereby you're ex is off the mortgage and you're paying capital off your mortgage.

From a quick check on mortgage comparison sites, if you need a 100% LTV mortgage and are looking to borrow £145k, there are plenty of options if you're happy to do it over 30 years. Most have repayments of between £550 and £650, fixed for 3 years. They also seem to be aimed at people with poor credit history. Surely this is better than interest only?

 

[OspreyO]

Well I'd assume it makes a new mortgage easier for a start, plus there is actually something there to buy her out of.



Declaring yourself bankrupt doesn't magically force the bank to change the affordability requirements for mortgages, it is more likely to cause them to force the sale of the house. AFAIK having dependents etc.. can delay it for a year. This is sort of the opposite of what he wants to achieve, he can voluntarily sell it now if he wanted to, declaring bankruptcy to end up in a worse position (as now his credit rating is ****ed) doesn't make sense.

In fact if he's otherwise fine as far as debts are concerned and is otherwise happily paying this mortgage then it just makes no sense that he'd then become bankrupt???

If he wants to remortgage/buy out his ex then his wife needs to get a job and increase their household income so they can pass the affordability requirements.

Sounds like there is negligible equity in the house. Even if got out of the current mortgage he won't get another one with his current income and no deposit.

Also the ex wants out. But she can't afford to pay her way out of it either.

They would have to both want to sell (and the op doesn't) to get out of it.

They can kick it down the road as he's been doing. But theyll be right back here until they realise this current house is not viable.

The bank won't let them break out of this mortgage. The bank has their head in the sand also.

Bankruptcy is a nuclear option for sure. It's the last thing you'd do. But the bank is the road block here. Unless the Op and ex realise they have to let the house go and start over. What they should have done originally. They would have got a new mortgage easier then then they will now.

A mortgage takes into account your age and how long you have to pay back the debt. You've less time as you get older.

 

[Freakbro]

But the ex-wants to buy a house herself, this at least has stamp duty implications for her no? If not also affecting how much she can borrow too?

I don't think it'll have an effect on what she can borrow as she can prove she doesn't pay anything towards it. I have a friend who has gone through the same issue. She left, he stayed in house. She wanted the sale a few years later for the same reason, but in the end got her 2nd residential mortgage no problem and is still currently on the original mortgage.

I don't know about the stamp duty, as the exemption http://www.emmersons-solicitors.co....ht-out-by-stamp-duty-changes-when-separating/ seems to be for separated married couples, they weren't married, but I can try and find out if she had to pay the extra 3%

 

[dowie]

Sounds like there is negligible equity in the house. Even if got out of the current mortgage he won't get another one with his current income and no deposit.

Also the ex wants out. But she can't afford to pay her way out of it either.

They would have to both want to sell (and the op doesn't) to get out of it.

They can kick it down the road as he's been doing. But theyll be right back here until they realise this current house is in viable.

What do you mean the ex can't afford to pay her way out of it? There is nothing for her to pay?

None of that makes bankruptcy a solution for anything.

 

[glenimp617]

£1,000 a month interest only? That must be one hell of a house

 

[cheesyboy]

My repayment mortgage is over £1000 per month. Hence the interest only

It'll be this high because there's probably only about 10 years left to run, and still a large balance. To be honest, I'd expect it to be closer to £1,500 per month.

If you could (which you can't due to affordability calcs) remortgage for 25 years at a reasonable interest rate, you'd only be paying about £750/month

 

[Semple]

£1,000 a month interest only? That must be one hell of a house

OP suggested earlier it's about ~140k/150k.

For that high of a repayment would suggest little to no deposit was used when taking out the mortgage, so LTV could be 100% or even more.

There's a couple of key details the OP hasn't revealed that's leading to lots of speculation.

 

[Freakbro]

£1,000 a month interest only? That must be one hell of a house

No, the repayment mortgage would be £1000 a month, hence he couldn't change to it and has stayed on interest only - which is less.

The reason it's so high is because he's currently effectively 'locked in' to his current provider, so isn't getting very good terms, on the repayment offer or interest only mortgage.

The new legislation in the link is to address situations like this, hopefully it won't be too long in coming

 

[h4rm0ny]

Why did Northern Rock force people onto Interest Only mortgages? I know it went bust and had to be bought out by the government, et al. But I don't get the mechanism whereby that leads to existing mortgage holders being switched to interest only.

 

[glenimp617]

Why did Northern Rock force people onto Interest Only mortgages? I know it went bust and had to be bought out by the government, et al. But I don't get the mechanism whereby that leads to existing mortgage holders being switched to interest only.

The banks only care about one thing. Profit. Be in assets or otherwise.
If their customers defaulted on their payments, the bank would take the asset. The housing bubble/crisis was volatile so their assets could lose value. Switching customers onto interest only secured their profit streams.
If you have thousands of houses coming onto the market from reposessions, the value would tank.

There's more to it than that, it's over complicated.

 

[touch]

Why did Northern Rock force people onto Interest Only mortgages? I know it went bust and had to be bought out by the government, et al. But I don't get the mechanism whereby that leads to existing mortgage holders being switched to interest only.

It wasn't an automatic process where everyone was moved onto interest only.
In the OP's case, for example, his LTV is around 100%. It'll be very difficult for him to find another lender who can offer him a 100% mortgage so he's stuck with the rates offered by his current lender and because it's a high-risk loan those rates will be high. He does have the option to switch to a repayment mortgage but the payments would be £1000 per month so he has to stay on interest-only.

He hasn't been "forced" in the strict definition of the word, but effectively forced by circumstance.

 

[h4rm0ny]

It wasn't an automatic process where everyone was moved onto interest only.
In the OP's case, for example, his LTV is around 100%. It'll be very difficult for him to find another lender who can offer him a 100% mortgage so he's stuck with the rates offered by his current lender and because it's a high-risk loan those rates will be high. He does have the option to switch to a repayment mortgage but the payments would be £1000 per month so he has to stay on interest-only.

He hasn't been "forced" in the strict definition of the word, but effectively forced by circumstance.

That makes sense to me. The way someone wrote it, it sounded like some automatic process. They were talking about that being maybe why (hypothetically) his ex- didn't know it had become interest only.

 

[McPhee]

I can't quite believe someone could, with a straight face, suggest bankruptcy as a sensible solution to this situation It smacks of playing politics with other people's lives.

The OP's ex is seeking to buy a house. If the OP declared himself bankrupt, she will have little choice but to buy his share and put the house on the market. It solves absolutely nothing. The bank is fine; they've had to do a bit of paperwork, but haven't really lost anything. The OP loses his stake in his home, likely gets evicted by his ex, and has to live with the spectre of bankruptcy for the next decade. The ex has a house she doesn't want, that she now has to sell in order to move on with her life.

Better solutions:

The house can be sold and all debts cleared, maybe even a little equity left over. The OP can then rent, go in to social housing, or University accomodation for the next few years.

Alternatively, the OP's wife can put University on hold, get a job once the College year is over, and they can try to buy the house outright. An independent mortgage broker could advise on specialist products designed to help people in this situation. If buying the house is possible, and the repayments are affordable while the OP's wife is at University, the delay could be small. Most Unis do a January start...

 

[Swifty55]

Buy her out or sell and get out of the financial mess your in?

How do you propose to pay the house payment off at the end of the term?