Ex-partner is wanting to sell the house.

.Lethal · 15 Jan 2019 at 11:14

I don't understand how a house that's worth 140k has a monthly repayment of £1,000 that's only to cover the interest fees.

If I was in that position surely to god it's better to agree with your ex and gtfo of there asap, renting doesn't cost anywhere near that outside of London for a multi bedroom house.

dowie · 15 Jan 2019 at 11:16

satchef1 said:
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.

Indeed, I'm not sure why the poster thought it was a solution - supposedly to force the bank into doing something when in reality it just leads to the house being sold and the OP ending up in a worse situation than if he'd chosen to sell up himself - something he doesn't want to do anyway!

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...

Indeed, this seems like the most realistic solution, assuming she is employable. He just needs to buy out the ex and get the house/mortgage in his and his wife's name.

cheesyboy · 15 Jan 2019 at 11:16

.Lethal said:
I don't understand how a house that's worth 140k has a monthly repayment of £1,000 that's only to cover the interest fees.

£550 for interest only. £1,000+ is the repayment figure

ColdAsIce · 15 Jan 2019 at 11:16

.Lethal said:
I don't understand how a house that's worth 140k has a monthly repayment of £1,000 that's only to cover the interest fees.

If I was in that position surely to god it's better to agree with your ex and gtfo of there asap, renting doesn't cost anywhere near that outside of London for a multi bedroom house.

It's not. I believe he said £550 interest only and £1000 to start paying towards the actual mortgage.

McPhee · 15 Jan 2019 at 11:22

Those numbers don't make much sense either TBH. £550/month on mortgage debt of around £140k gives an interest rate of ~4.7%.

£1,000/month on the same mortgage over a repayment term of 25 years gives an interest rate over 7%. Maybe I'm wrong, but isn't the interest in a repayment mortgage usually the same or lower than interest-only?

Only explanation I can come up with is the £1,000+ figure is without remortgaging, and is based on the remaining mortgage term. Which begs a question of OP's age; is remortgaging over a longer period not feasible? If that is the case, then buying isn't likely.

Would the bank consider moving the mortgage back to repayment, on a 25 or 30 year deal? The payments are much more manageable then...

cheesyboy · 15 Jan 2019 at 11:24

satchef1 said:
Those numbers don't make much sense either TBH. £550/month on mortgage debt of around £140k gives an interest rate of ~4.7%.

£1,000/month on the same mortgage over a repayment term of 25 years gives an interest rate over 7%.

Only explanation I can come up with is the £1,000+ figure is without remortgaging, and is based on the remaining mortgage term. Which begs a question of OP's age; is remortgaging over a longer period not feasible? If that is the case, the buying isn't likely.

The mortgage is already about 15 years old - there's probably only 10 or 15 years remaining.

Divide the £140k capital by 10 or 15 years of payments, add a bit of interest, and you're about there.

McPhee · 15 Jan 2019 at 11:27

cheesyboy said:
The mortgage is already about 15 years old - there's probably only 10 or 15 years remaining.

Divide the £140k capital by 10 or 15 years of payments, add a bit of interest, and you're about there.

That's what I meant; why can't the OP extend the mortgage? Taken over a longer period of time, this mortgage should be manageable. The only reason why he's on an interest-only deal is because the interest rate is crap and there is limited time remaining. Changing one of the two goes a long way to solving the problem.

cheesyboy · 15 Jan 2019 at 11:28

satchef1 said:
That's what I meant; why can't the OP extend the mortgage? Taken over a longer period of time, this mortgage should be manageable.

The Bank's affordability calculations rule it out, I'd imagine.

Very little would come out as affordable on "a little above minimum wage" for a family of four.

randomshenans · 15 Jan 2019 at 11:44

cheesyboy said:
Very little would come out as affordable on "a little above minimum wage" for a family of four.

This is because in reality, he can't afford the house in current circumstances.

Semple · 15 Jan 2019 at 11:52

dowie said:
Indeed, this seems like the most realistic solution, assuming she is employable. He just needs to buy out the ex and get the house/mortgage in his and his wife's name.

Even a part-time job during uni will help boost their finances.

It's harsh to say, but the OP is clearly in a position that with his sole income they cannot afford house ownership. I understand the downsides of renting and would mean you have no asset, or may struggle to save towards a deposit for a place of your own. But this will undoubtedly happen in the next sub 10 years when your mortgage term comes to an end.

If the house purchase price was 140k, then they need to potentially put aside 14k each year along with continuing to pay their interest mortgage payments, that's close to ~20k a year on housing alone. If that's deferred a few more years whilst you wait for your wife to finish uni and get a degree, that could potentially push that upto ~25k a year for housing. Unless your wife is qualifying for some 35k-40k a year job, i think this ship has well and truly sunk already.

McPhee · 15 Jan 2019 at 11:56

randomshenans said:
This is because in reality, he can't afford the house in current circumstances.

In reality, he can.

On paper, he can't.

He's currently paying £550/month on an interest only mortgage, a mortgage that he has paid successfully for 15 years. A new repayment mortgage would cost about the same (maybe a little less) at typical rates. Private rent is more like £550-£650/month.

He can't afford the new mortgage because £140k of debt on a salary of ~£20k is not a good idea. But he's in that debt already anyway. And moving to the private rented sector will likely increase the monthly outgoings on housing. The most affordable solution is a new mortgage, which is also the solution that he cannot afford.

It's a rather unfortunate situation. But not an uncommon one.

FortuitousFluke · 15 Jan 2019 at 12:21

satchef1 said:
In reality, he can.

On paper, he can't.

He's currently paying £550/month on an interest only mortgage, a mortgage that he has paid successfully for 15 years. A new repayment mortgage would cost about the same (maybe a little less) at typical rates. Private rent is more like £550-£650/month.

He can't afford the new mortgage because £140k of debt on a salary of ~£20k is not a good idea. But he's in that debt already anyway. And moving to the private rented sector will likely increase the monthly outgoings on housing. The most affordable solution is a new mortgage, which is also the solution that he cannot afford.

It's a rather unfortunate situation. But not an uncommon one.

That's the depressing thing, he's in a position where he has been paying £550 p/m for 10-15 years and not paying off his mortgage. He can't remortgage to a 25 year repayment mortgage because the bank says he can't afford to pay £550 p/m, despite 10-15 years of evidence to the contrary.

A friend of mine had a similar situation when she divorced. She could evidence that she was paying the mortgage solo and coping easily, the bank wouldn't transfer the debt solely to her due to their affordability calculations.

It's a **** situation.

randomshenans · 15 Jan 2019 at 12:29

satchef1 said:
In reality, he can.

On paper, he can't.

Yes, precisely. I was simply referring to the official/ from the bank point of view. He's already had a couple of months where he couldn't pay, so from a banks point of view, he can't afford it.

The_Abyss · 15 Jan 2019 at 12:35

This is why stress testing is included in mortgage affordability. OP would have failed stress testing at the point his ex left, if it existed then and if the ex tried to get off the mortgage then.

arknor · 15 Jan 2019 at 12:36

raffle the house off put in the tc that if not enough tickets are sold the winner only gets a small cash prize

Freakbro · 15 Jan 2019 at 12:37

FortuitousFluke said:
That's the depressing thing, he's in a position where he has been paying £550 p/m for 10-15 years and not paying off his mortgage. He can't remortgage to a 25 year repayment mortgage because the bank says he can't afford to pay £550 p/m, despite 10-15 years of evidence to the contrary.

A friend of mine had a similar situation when she divorced. She could evidence that she was paying the mortgage solo and coping easily, the bank wouldn't transfer the debt solely to her due to their affordability calculations.

It's a **** situation.

They are supposed to be changing this though aren't they? That rental payments (which never counted before) or the fact you have been paying X mortgage does show affordability rather than the possibly overly strict affordability calculations currently.

Which would make a lot more sense without needing to go back to the ludicrous situation of self certificated 125% mortgages we used to have!

Terminal_Boy · 15 Jan 2019 at 12:48

When the OP’s ex finds out she’s actually accrued debt instead of some equity, it’s going to be on like Donkey Kong.

FortuitousFluke · 15 Jan 2019 at 12:58

Freakbro said:
They are supposed to be changing this though aren't they? That rental payments (which never counted before) or the fact you have been paying X mortgage does show affordability rather than the possibly overly strict affordability calculations currently.

Which would make a lot more sense without needing to go back to the ludicrous situation of self certificated 125% mortgages we used to have!

To be honest I'm not sure, it would make sense to me though. I mean the affordability calculations can be an indication of risk but I think track record should minimise how much that is taken into account, especially since risk declines as equity increases.

Freakbro · 15 Jan 2019 at 13:02

FortuitousFluke said:
To be honest I'm not sure, it would make sense to me though. I mean the affordability calculations can be an indication of risk but I think track record should minimise how much that is taken into account, especially since risk declines as equity increases.

Here's something about it, seems it's about making rental payments appear on your credit file/score

https://www.moneysavingexpert.com/n...ar-in-experian-credit-reports-for-first-time/

Though it seems it's just Experian and you have to sign up for it. Would be much better to be universal since I can imagine most people wouldn't be aware of this.

dowie · 15 Jan 2019 at 13:05

He's on low income and has been just about covering payments at the moment - albeit apparently with his ex helping him out to cover a couple of months in the past... what happens if interest rates rise a bit?