Separating from wife, looking for advice on housing

J

jumbod

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Hi, first time poster so I hope I am following the rules correctly.

Background: I (late thirties) want to separate from my wife of 15 years, we have 3 children under 10. Currently living in our own home with €30,000 left on mortgage (30 years left). I have managed to get the mortgage mainly cleared off over the last number of years by overpaying (variable rate mortgage). The home value is about €500,000.

I am self employed (company director). My personal savings are €15k along with another ~€20k in investments (gold/crypto). The last few years the company has taken in roughly €150k a year but currently I just pay myself €7k per month (before tax). Company bank account currently has about €90k which is nice as it means if I am out of contract I can still afford to pay my wages for a few months. My wife works in a full time position (€70k per year) and has about €10k savings. My current outgoings are about €1200 per month (child care) and €150 per month (mortgage). My wife covers the other bills and most food shopping. Other bigger items like holidays/renovation etc are basically paid by whoever has excess money in their account at the time.

In an ideal world I would like to buy a 3 bedroom house close to the area we live in now so I can continue to be in my children's life daily (dropping/collecting form school), have them staying in my house 50% of time etc. From what I understand I will need a 20% deposit for a new mortgage. Even if I drain company account/investments I won't be able to achieve this after taxes. Would a bank allow me to use the existing house as collateral for a new mortgage?

My goal with this is to try cause as little as possible disruption for all involved and hopefully make my current partner wife's and my life a lot calmer (as you can imagine my house is not currently a very happy place :().

Would love to hear from others how they dealt with getting a place to live after separation. Going back to my parents is not an option and I really don't want to have to rent a house as in my area I would be looking at roughly €3k per month for the house I would need which would severly hamper my ability to buy a house in the near future.
 
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Don't think the bank will allow you use the existing house as collateral. You've about €45K in savings which depending on the area might be enough for a deposit on a 1-bed apartment. Think your best option is to live separated in your existing house for the next 2 or so years and try to save up another €50K for your deposit.
 
You want to separate, does this mean you do not yet have a separation agreement in place? This will be needed before you will get another mortgage for a separate property assuming you are going for one in your sole name. But maybe you are not as if you wanted to use the existing property as security or more likely to borrow extra against it to supplement deposit that would need both of you to sign for the lending.

Although it's not unheard of for 'married' couples to buy a second property as a 'BTL' and unofficially then just separate, messy though unless you have very good relationship and no hassles about money plus it's unfinished business!
 
jumbod said:
My personal savings are €15k along with another ~€20k in investments (gold/crypto). The last few years the company has taken in roughly €150k a year but currently I just pay myself €7k per month (before tax). Company bank account currently has about €90k which is nice as it means if I am out of contract I can still afford to pay my wages for a few months. My wife works in a full time position (€70k per year) and has about €10k savings.
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So your combined assets are
Your personal savings: €15k
Investments: €20k
60% of company cash: €54k
Wife's savings: €10k
Total : €99k

So it's looks as if you are fairly close to 20% of €500k.

You have a combined income of €150k
So you could get a joint mortgage of €450k - as you have such a small mortgage.

I don't know how the lenders look at a separated couple buying a house together.

I wonder would they give your wife a mortgage of €250k to buy you out?

You need to talk to a mortgage broker.

As Monbretia has suggested, you might get a buy to let mortgage. The problem though is that the interest rate would be higher than a normal mortgage.

Brendan
 
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Another suggestion worth considering is selling your current home.
You will have about €250k cash each.
She will be able to borrow about 3 1/2 times her income and so buy a house for €500k.
You have cash so won't need to borrow as much.

The banks would go for this even though they would not give you a €250k remortgage on your current home, which would be the same outcome.

The advantage is that it's doable.
The other advantage is that your finances will be completely separate.

By holding onto the existing house, it will be very hard for her to recognise that you are entitled to half of it when the kids have flown the nest.

A possible workaround is for you to sell the house to a friend. They can sell it back to your wife.



Brendan
 
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Just divorced although my situation is quite different. First of all you now only need 10% deposit even if you are not a first time buyer (you may be aware of this - I was not until I went looking for a mortgage, rules changed this year). If you remain an owner on the family home then I don't know what the situation is - I guess it may be viewed as a BTL. So maybe that is where the figure of 20% is coming from.

We sold the family home and split the equity (not the amount you have unfortunately!) and I just drew down a mortgage at 10% deposit. We had been renting (family home was down the country and we live in Dublin) and my ex stayed on in the rented home. I moved out and rented for a while as we finalised things and I got my mortgage. I had savings that I could not use as a deposit until a separation agreement had been finalised. Once that was done I moved on getting my own house.

We went for a completely clean split (we are doing 50:50 parenting week-on, week-off) with divorce, split assets, maintenance agreements etc. I am really glad we did because what started as a completely amicable separation ended up far from it. We now have no communication other than by email and two minutes during drop offs. It would be impossible to manage co-ownership of a house or other assets for us at this stage.

My sister and her ex had a situation almost identical to yours (except both PAYE workers). They sold the house, split the equity and bought their own homes. The main downside was that they had to sell the family home. But the reality is that they are running two households on the same income as they were running one - so something had to give.

If you are looking for any other information on separating then please DM me. I don't want to go beyond your original query relating to housing.
 
@jumbod - if you don't mind me asking, why are you leaving the home and trying to purchase a new house and not your future ex-wife ? I'm not looking for a reason to be given here, but just ask yourself if there is a specific reason you are leaving and not her.

jumbod said:
own home with €30,000 left on mortgage (30 years left).
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Also - assume the €30K is a typo and should be €300K
 
@jumbod, I've been though all that and it's not easy. For your children's sake it's very important that you get a house that they can stay in. The disruption of them having to move will be far less than losing their relationship with you. Therefore don't be pushed into renting or buying somewhere that is unsuitable on some notion of "doing the right thing" and leaving them in the current house with their mother. Children need their father as much as they need their mother.
Do not move out until there is an agreement in place. That is absolutely essential. If you do move out you are at a serious disadvantage and a settlement could take years. Selling the family home and splitting the proceeds seems like the fairest and most equitable option.
 
Thanks all for the the very insightful comments on this. From the sounds of it I will need to rent until the separation is official and then look at buying a house, if I can avail of a 10% deposit for a mortgage in my own name that would be great. I didn't want to rent due to the huge cost of rental at the moment but it seems like I have no other options. This time renting should also allow me to get the deposit in order (taking money from company/investments). As you also mentioned things seem amicable enough at the moment my wife doesn't understand why we need mediation and doesn't seem to be looking at the bigger picture of a life apart.

@Meme1977 thank you for your reply, the complete 50:50 split is something I want to do too. @Jazz01 I'm leaving the house with the wife and children to try and cause as minimum disruption to their lives as possible (the 30k is correct although now thinking about it havign 250k in savings would make my life a lot easier now!), I know all the changes will be tough on them and to @DannyBoyD point they are first and foremost in my attention, they are probably the reason this hasn't happened earlier as I always had such guilt and worry about not living with them 24/7.
 
You are both in a good position financially

Equity in house €460K
Your personal savings: €15k
Investments: €20k
60% of company cash: €54k
Wife's savings: €10k

Total joint assets of €559K, split in half €279K each, more than enough for a significant deposit each if you sold the home and bought a €500K home each, probably end up with a €250K mortgage each with bills and costs etc paid.

The overall cost to you both would be reduced if you could release equity from your current home, Brendan has some good ideas to consider. If you got €180 equity release plus your wife’s €10K, she could stay on in current home with €210K mortgage, and you would have €279 cash to use as a deposit for a home for yourself and the kids. If you purchased for €500K you would have a €221K mortgage, ignoring all costs.

If I were you have that financial conversation with your wife asap, lay it out as joint assists, joint responsibility and joint need to look after your children together. Once you have agreement, then progress quickly to reduce the overall pain and prevent it turning nasty.

AIB do top-up mortgages so it might be a great option for you to get equity release.
 
I thought that top-ups were just for home improvements. This suggests that you might get one in your current situation.

What is a top-up mortgage?​

Are you thinking of some home improvements? Or perhaps you want to help a family member buy a new home or you need to pay inheritance tax on a property? If the balance of your current AIB mortgage is less than the current value of your home you may be able to release the equity in your mortgage, to help with expense and more. You can:
 
I think your trying to mirror your housing situation that you have at the moment… That’s understandable, as you don’t want to feel worse off in the separation scenario. But, in most cases, the kids Will spend the majority of time with the mother in the family home.

Bacially, it’s being suggested in both your financial positions, to cover the cost in upgrading to a million Euro home… if you were still together as a couple. (ie, two €500k properties , could you guys have afforded that..

Selling the family home to allow you to avail of a similar property will affect the kids more. It’s the only stability the may have left right now.

I’m also not saying buy a 2 bed apt, it just doesn’t need to be a half million home at this stage.

There must be a typo somewhere in the 29 year left, to pay off a remaining €30K mortgage of the original loan which was €290k, that can’t be right, unless you’ve lumped a hefty payment in there in the very early stages of the loan, or, I’ve missed something along the way.
 
If you have a €300k mortgage over 30 years and pay off huge amounts of capital while keeping the term the same, of course, you can have a mortgage balance of €30k with 29 years left.

Brendan
 
jumbod said:
As you also mentioned things seem amicable enough at the moment my wife doesn't understand why we need mediation and doesn't seem to be looking at the bigger picture of a life apart.
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I think when the discussion with your wife about selling the family home and splitting the proceeds takes place, things will take a turn for the worse.

It is only human nature after all to protect what one already has.

I think that a level headed discussion about raising finance on your existing property to fund a new property for you is the way to go. She can stay in the family home and you will agree to this. She will also assist in the repayment of this loan in turn for allowing her to stay in the family home.
 
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