General advice on split with ex and mortgage

As a newbie to this site, and given what an excellent source of information that it is. I thought I would ask about the new situation that I find myself in to get any thoughts. I and my partner bought our house in June 2 years ago costs of 302k and today has 295k left on the mortgage that we took out with First Active. My now ex then broke us up to see someone new at the start of May and we are both still living in the house albeit in difficult circumstances.
The actual value of the house may well now not even 240k given the prices in the area that we are in and in any event there is practically no movement in the ones that are on the market. It is compounded now by my health service job having effectively taken a hit by 240 gross per month so I have actually earn less than I did when we got the mortgage 2 years ago.

I appreciate that the value of the house isn't really relevant unless it was to be sold. My ex is self employed and in a vulnerable position given the economic situation and has had to cut hours some of the people employed in the business.

My ex wants to continue to live there. I understand that the practicalities of us both living there as house mates make this undoable but from a mortgage point of view for us to sell would involve a very large shortfall. I can't imagine that the mortgage company would permit either one of us to take on the mortgage as an individual where one of us would live there and rent out the other 3 bedrooms to help make the payments. This would mean that one of us would then have to be taken off the deeds and move on elsewhere and losing our FTB status.

I don't think that it would be as clear as one person moving on and thereby freeing themselves of the 'paper debt' of the drop in prices would it? It would seem unrealistic that either of us would have to buy the other out when there is such a loss in value. The other option of renting it out as a 4 bedroom in the area we are in, next to a college and a hospital it has potential as a place to rent out but from talking to neighbours that are renting I can't see us getting more than 900 a month for the house, our mortgage payment is (without both of our TRS) 1550 each month.

Aside from the shock of the relationship break-up (8 years) which is extremely difficult for me to deal with I am very conscious that mentally I shouldn't make any decisions too quickly on this. We are for the moment pretty amicable which is a lot more difficult for me as the dumped rather than the dumper however I am determined to not descend into unpleasantness, similarly I have to now safeguard whatever future I have and not let the circumstances I am in at the moment dictate negatively what is going to happen in the future.
I would be grateful for anyone's opinions on the situation, complicated as it is. I understand that I will have to speak to the mortgage company and probably a solicitor at some stage but I would be interested to hear of anyone's experiences or ideas before I do.

This is very difficult.

I presume that you do not have an agreement on what to do with the house if you split up?

I presume that you both put up an equal amount of the deposit?


Your half of the house is worth €120k but you have a mortgage of €150k.
Pay €30k off the mortgage if you can raise €30k from family for example.
Transfer the mortgage and house to your ex. The bank may allow this, you will have to ask them.

Alternatively, could you find a buyer for your ex's half? Your ex would then have to come up with €30k.

If you are both getting on well at the moment, then you should probably ask a mutual friend ( an accountant, a broker, a solicitor) to review it and help you work out a solution.

Brendan

Brendan said:

This is very difficult.

I presume that you do not have an agreement on what to do with the house if you split up?

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We didn't have any agreement which looking at it now was shortsighted.

Brendan said:

I presume that you both put up an equal amount of the deposit?

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We split everything from deposit to mortgage repayments and household bills as we both paid 1k a month into our joint account. We serviced the mortgage and our direct debits,insurance, utilities etc from it

Brendan said:

Your half of the house is worth €120k but you have a mortgage of €150k.
Pay €30k off the mortgage if you can raise €30k from family for example.
Transfer the mortgage and house to your ex. The bank may allow this, you will have to ask them.

Alternatively, could you find a buyer for your ex's half? Your ex would then have to come up with €30k.

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Following your logic here then is it going to cost 30k for either of us to get out of the mortgage responsibilities?
If I were to keep it on (and given the alternative, I really want to) then the mortgage liability (bank willing) would transfer to me, 30k would be also coming my way by way of my exs liability to the house which I could then pay off the house leaving me with a 265k mortgage for a possible 240K market value at present. Given that I have no intention of moving or selling then I can sit on it until the market picks up, no problem.

Brendan said:

If you are both getting on well at the moment, then you should probably ask a mutual friend ( an accountant, a broker, a solicitor) to review it and help you work out a solution.
Brendan

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It may well be a case of both of us going to the mortgage broker together to see what we can come to. As for getting on well at the moment, that is something that could change at any stage given that I have to come to terms with the breakup especially as there is another party involved.

Thanks a lot Brendan for the advice, much appreciated. It is hard to get some perspective on it.

Sandstone firstly I feel for you as a family member is going through a horrible split and 2 kids involved. I comment your attitude and the fact you have an amicable relationship and hope that at least lasts.
May I suggest that one of you remain in the house and try to rent as many rooms as possible but that whoever has to move and rent that there rent is taken into the equation. ie mortgage 1550 plus person who has to rent of say 800 = 2350 - (3*300 - rent for 3 rooms) 900 = 1450 divide this by 2 and you both pay that. This was you both continue to pay mortgage and then wait until things pick up and transfer to one of you or sell property.

As it is currently an amicable split now is the time to deal with this. Some options to consider in the situation of unmarried people who have split owning assets.

1. Being realistic it is highly unlikely that you both will be able to continue living in the house. The best thing would be to sell it if at all possible and take on personal debt for the negative equity. This may not be possible as the amount needed may not be forthcoming from the banks. They would probably loan you 30K as you have a permanent job but not your ex. Speak to the bank and put all your cards on the table.

2. You can try to ride out the storm, but we don't know how long the recession will be. If you decide to do this then you both should try to overpay the mortgage to get the negative equity down with a view to walking away with no gain but no loss either.

3. Renting out the entire house with such a differential in rent to mortgage doesn't make sense to me.

4. One of you could try and get the mortgage in their name only and the other partner would have to pay the negative equity debt of 30K in addition. This is only possible if the bank would give the entire mortgage to one person based on their sole salary, that that person could comfortable afford the repayments and that the other could raise an additional 30K to repay the other.

Please bear in mind your valuation may not be correct, you also have the (in my opinion) possibility of values falling further and also it may not be possible to sell the house.

Whatever you decide the best thing you both can do now is to keep it amicable and work together to extracate yourselves from this.

Folks

Stay on topic.

I have deleted off-topic posts which are of no help to the OP who has a serious problem.

They are valid issues and if you wish to open a new thread and refer back to this one, by all means do.

Brendan

I am very sorry to hear of your trouble.

Is the ex currently able to afford the property on his own? Have you been to the Bank to discuss your options yet? Will the Bank allow him transfer the debt into his sole name?

One thing to bear in mind is that property values will realign themselves at some point and until that happens you dont know how you are fixed.

There are two schools of thought here. From a financial point of view, I would echo what niceoneted has to say......sit on it for the moment, however, from an emotional point of view, this ties you to the person for a longer period of time and may not help you moving on, particularly as you are the dumpee, so to speak.

This is the worst time to be looking at a break up. Given that your ex is the one instigating the break up, have you asked if he is willing to take on all the debt and allow you walk away? This may seem unfair from a financial point of view, however, you are negotiating here for your own financial future and you could be getting out at the worst possible time. If he intends on living there indefinitely, then as long as the mortgage can be paid it does not matter if there is currently negative equity. Is he thinking of moving his new partner in, if so, then he may not have any difficulty paying the mortgage. If it were to happen in 5 years time , then it could be a totally differerent scenario for you, so I am not sure I would bail out at this stage - what are his thoughts on it?

Also, I note you are trying to keep things amicable and that is honourable. Myself and my ex (10 years ago) started off amicable enough however things soon disintegrated into a "war of the roses" and even the dog became a target. (He hid the dog for months and told me she had been stolen which resulted in my tearfully combing nearby estates, ads in newspapers,etc) My best advice would be to see a family law solicitor.

Good Luck with it!

Thanks to all for the advice and kind words. I have to see my solicitor tomorrow and First Active on Friday. I will keep the thread up to date with developments for others coming after me that may be in a similar position.

Hi,

I have just come through a situation like this. My partner broke us up last July and I moved back in with my parents straight away (as I thought there might have been a reconcilliation and didn't want to rock the boat any further). I paid the mortgage for one more month after I left but decided not to pay it after that, as I was not living there.

Luckily for us we had bought the house in 2005 and even in the current climate is was still worth 50k more than we paid.

We decided that she would buy me out (mainly due to the fact that we have a child) and there would be no point in all 3 of us being homeless and having to look for new places to live.

Your situation as you state seems amicable at the moment, but I'd feel the amicability will only last so long. There are many choices you could take and they have been listed by a few other posters and they have come up with some good questions.

Can you afford the mortgage by yourself?
Can your ex?
Does he plan on moving this other person into the house at anytime in the future? If so, do you want to be there?
Would he walk away from the "paper debt"

The best advice would be to speak to a solicitor and don't rush into anything.

Hi

I have also just come through a similar situation. My ex and I broke up in 2006 - he moved out and I continued to live in our house and pay the mortgage alone for two years. Last year we put it on the market but it failed to sell. The mortgage outstanding was €262,000 and the original purchase price was €300,000 - of course the value has dropped quite substantially (from a peak of €370k) and a sale would have barely covered the o/s mortgage (if even!)

In the end I decided to make one last stitch effort with the bank - I wrote a detailed letter explaining the situation and that I wanted to transfer the mortgage and deeds into my own name (my ex agreed to this as it removed the risk of sliding into further negative equity for him!) It took a couple of weeks of persuasion but in the end they agreed to grant a Deed of Transfer to my name only - so now it is a sole mortgage and the house is in my name (a relief!) - the whole process cost about €500 including legal fees etc. I basically proved to them that as I had being paying the mortgage alone for two years I was the "better bet" in terms of capability to repay. In addition they extended out the term to 35 years.

What I would say to you is not to give up - write down all your income plus any likely income you could receive for potential rental of rooms (you can earn up to €10k per annum without having to pay tax). At the end of the day I think some of the banks are taking a more realistic view that it is better to have somebody paying the mortgage then a bunch of repossessed properties sitting on their loan books.

Please do try to look at the options if you can - could anybody go as a guarantor for you until you get on your feet? In the first instance take some legal advice and best of luck!

do be aware that there may be stamp duty implications as well if you are not married

In the current market a valuation is likely to be quite conservative - therefore it may be possible that stamp duty will not be payable. This was the situation in my case but again best to address all issues with a solicitor.