Getting married new year partner in negative equity

I am currently divorced with one child. I bought my house in 2002 3 b/r semi detached, current market value €185,000, mortgage outstanding €129,000. My partner bought his house in 2006 2 b/r terraced for €197,000 current market value €155,000 - €160,000. We are planning to get married at the end of 2011. My partner is interested in us buying our own place together in a year or two.

My questions are:

Would it be possible for us to rent our house out and buy jointly or would we have difficulty getting a mortgage considering he has negative equity of €35,000.?

My other question is when we marry would I be acquiring his negative equity debt of €35,000.?

I am quiet anxious about the whole thing as it took me a long time to sort out my finances after my divorce and get to the point where I could afford to buy a house for my daughter and myself.

Your partner will not and should not get another loan as he is in negative equity.

No you do not acquire his negative equity on marriage.

Which house are you planning to rent if you buy a third? Are you planning on selling one house?

Would it not be better for him to sell his negative equity property, move in with you, pay back his negative equity (loan from bank to do so), save and buy?

We have discussed about a year ago selling the two houses and buying a new house together in both names. We had agreed that we would put in equal shares when buying the house.

However a year on and the situation has changed. My partner wants to rent his house and move in with me. Rental income will be approx €500 - €600 per month, which will not cover his mortgage of €930.00 per month. He is adament that he does not want to sell his house and wants to claw back some of the money he put into it. I think he is being unrealistic as he is in negative equity of €35,000+ and if the papers are right they expect house prices to fall another 10%. He is still keen on us buying in a year or two which with his current situation is not feasible. I think the sensible thing would be to put off buying and for him to make a practical decision on what he wants to do with his house long term.

I''d be careful with this. In a marriage situation his debts will become your debts fairly quickly regardless of the legalities.

You should probably do a pre-nup setting out who owns what and how much each person owes.

Forget about buying a house together - it's not going to happen for a long time.

When he moves in with you, he should make a big effort to pay off the negative equity. He will have the rent and can continue to make the repayments he is making at the moment.

This is a bit "unfair" on you in that he will be using his resources to get out of negative equity, instead of sharing the cost of your mortgage, but that's marriage.

I think that the pre-nup should specify something along the following lines:

" House A and Mortgage A belongs to A.
House B and Mortgage B belongs to B.
As B is in negative equity, it is agreed that he will devote his finances to reducing his mortgage as quickly as possible to the value of B's house. B is making no contribution to the repayment on House B and has no rights to it at all".

Thanks for all the advice. I am sorry if I come across quiet cynical but I've been burnt once before. He did offer to pay a contribution towards my mortgage but am I right in saying that without a pre-nup he will have a claim to my house if I accept the contribution? I also thought that pre-nups had no legal standing in Ireland?

pre-nups have no legal standing. However, they make it very clear to both of you who owns what and what you are agreeing to in the first place.

Pre-nups have absolutely no standing in this country! hence it is a pointless exercise agreeing what you do and do not own!

This is very messy and could get worse. OP you and your partner need to sit down and property discuss it. You are right to want it sorted out.

If your partner pays part of your mortgage he will in all likelyhood be acquiring an interest (share in the value) of the house. I wouldn't see this as necessarily a bad thing in a marriage situation. But you need to understand that. Meanwhile he would be paying off his house and owning his house outright, would you be acquiring any share in this property and would you want to.

He wants to hold his house (in negative equity and declining as per the OP's assumption), he wants to move in with you and he wants to purchase a new house. Think about that.

I really think a proper chat on how finances are going to be sorted, and he needs to give a lot more as he is the one with the negative equity. As a starting point why don't you both write down what you want, discuss the logic of it, then say what you are both willing to give or take or risk until you reach an arrangment that is suitable for you both. It's important that there is a clear understanding between you both, preferably (absolutely) in writing and that you are both happy with the decision. A bit like marriage really, for better or WORSE.

JudgeDredd said:

Pre-nups have absolutely no standing in this country! hence it is a pointless exercise agreeing what you do and do not own!

Click to expand...

While they have no legal standing, they are a very valuable exercize in that they force you to discuss and agree what you want to do.

They also list out who owns and owes what at this stage which can be referrred back to at a later stage.

You also agree to what will happen in the event of splitting up. Of course, this has no legal standing, but may well have a very strong moral force.

Do a pre-nup. You have nothing to lose.

Thanks again for all useful advice. I suppose I am getting more anxious now about the whole thing. I have tried to talk casually talk about the value of his house but he keeps saying his house is worth €180,000 when its not. I know from prices of 2 b/r houses in the area and they are only going for €155,00 - €160,000. He hasn't actually told me he's in negative equity!. I only found out last week that he took out a mortgage for €197,000 and the penny dropped. I agree that we need to sit down and have a proper chat on the finances sooner rather than later.

What's that coming to mind about .... having your cake and eating it too:

http://en.wikipedia.org/wiki/Have_one%27s_cake_and_eat_it_too

Have a read of the above ..... I think it covers your situation well.

You've been burned once, have come out of it, .... you're right to be cautious especially when you want to protect your daugter from confusion again.

You hold the cards .... don't be rushed into a decision.

Good luck with it.