Separation looming, fresh perspective on finances needed

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byrnekbyrne

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Hi all,

My situation is that my partner and myself are considering splitting up in the near future, we get on ok for now, things just not working any more and we are preparing for the inevitable split and the financial impact of this on all of us as we have a one year old daughter.

Current situation is as follows

We have been residing in my grandmothers home for the past year, I had an apartment which I sold and we moved into grannys home, granny not residing there and not charging rent we are acting as caretakers, I invested approx 30,000 to do home up, house in decent area in Dublin and close to creche for our daughter so nice area for a child. I will eventually inherit this house.

Neither of us have any other loans/mortgages,credit cards. I have savings of approx 35000, partner has approx 40000, she earns 45000 p/a, I earn 50,000 p/a

I am toying with different options of what is the best way to proceed, I’m leaning towards helping my partner get a mortgage on a house close to area we are in now, this would involve a joint mortgage application as she could not qualify on her own, partner and my daughter would then move into this home and i would stay where I am, I would be assisting financially through maintenance etc but partner confident she can meet repayments on her own and then at a later stage buy me out of home. Benefits of this are i’m close to our daughter and it doesn’t upset our lives too much, downside is i am jointly tied to a mortgage on house I’m not living in and down the line that could be a problem.

Second option which is less desirable is for partner to buy a home in her own name outside of dublin, but that would mean long commute and uprooting daughter, for that option I have no problem in gifting money to help with deposit but would mean a longer stint in our current situation together which would allow us to save more money but it’s difficult living under the same roof when not together.

Would be greatful for a fresh perspective on above and if there are other options/pitfalls I’m missing

Many thanks
 
Is the second option less desirable for you or your partner, or both? Daughter is too young for uprooting to be an issue.
 
michaelm said:
Is the second option less desirable for you or your partner, or both? Daughter is too young for uprooting to be an issue.
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Well it’s the least desirable for both of us but also in the best interest of our daughter long term as it’s better that both her parents are close by and not hours apart.
 
Option 1 has a lot of potential pitfalls.

1- Your soon to be ex partner finds someone else who moves into the property. Are you happy to have your name still on the mortgage.
2- Your ex loses her job and is unable to pay the mortgage. This will damage your credit rating if payments are missed.
3- You want to get a mortgage some time in the future but are unable due to your name being on this house

Option 2 whilst not desirable now would be a much better option for the long run. Your ex will have a property in her own name that she can do what she wishes with. You are not tied to the property and have no other financial commitment apart from the maintenance for your child.

I have a 10 month old so I can sympathise with your situation but I very much doubt that they will feel uprooted. The main impact will be from not having both of their parents under the same roof but that is going to happen regardless.
 
None of the options is ideal. But you have to pick one of them.

So, it seems to me that buying a house with her is the best option all round, despite the potential problems.

Ideally, she would meet someone else and he would buy out your interest.

How much will the house cost? She is going to need a 20% deposit as you already owned a house.

But it also suits you that she puts in most of her money, so that the risk of negative equity is reduced.

Can she access any family money? It would be best if you contributed nothing to the cost of the house to make it as clear as possible.

I am assuming that you are going to be able to stay in your granny's house for the foreseeable future and won't need a mortgage yourself?

So what sort of agreement do you do?

The simplest:
The house is 100% hers.
She will repay any money you lent her to help with the deposit.
She agrees to sell the house by the 31 December 2024, if she has not been able to refinance it.
If she goes into arrears, then she agrees to sell the house immediately.

The more complicated agreement
You own the house 50/50
You both make repayments on the house from a joint account
You keep an eye on the account to make sure it does not go into arrears
If either party does not contribute their share into the joint account, the following happens [The other party contributes to avoid arrears and their ownership of any positive equity rises by 5%]
You share the increase or decrease in value of the house
Either of you can sell the house after 1 January 2023
If she buys you out within 2 years, she keeps all the increase.

This gives her a real incentive to buy you out as quickly as possible.
 
A third option would be to maybe ringfence an apartment/living area in your current grandma's house till she has a big enough deposit to buy on her own ?
 
So if you are not married, you need to address a few other items, if you've not already done so.

First up, you need to apply for guardianship of your daughter. Married parents are automatically legal guardians of their children. Fathers who are not married to the mother of their children, have to apply for guardianship.

Secondly, agree on a monthly maintenance for your daughter, get a court order to support.

Some banks (not all) will include court ordered maintenance as income.

Personally, I would avoid, like the plague , a joint financial arrangement such as buying a house together.

Better to give a lump sum as a gift if you can do so.

The other thing you need you need to do is draw up a joint parenting plan; and you need to factor into your life being a lone parent and caring for your daughter while she's with you.
 
Thirsty said:
Personally, I would avoid, like the plague , a joint financial arrangement such as buying a house together.
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Hi Thirsty

Every option has pros and cons and no option is without problems.

But you shouldn't just dismiss an option without setting out the reasons why some other option is better.

It seems pretty clear to me that the "Give a gift option" won't be enough to buy a house near where he lives and they will have to continue living together for some more years.

I would choose an option with potential problems over an option which has definite and immediate problems.

Brendan
 
There is no easy option and I don't have much financial advice.

All I know is that for separated couples I know, having each partner's home as well as the kids' school in very close proximity makes life easiest in all sorts of ways.
 
This is not financial advice and I'm sure you've already made a decision. But have you exhausted all hope of remaining together, counseling etc? Life with a young baby is so hard on a relationship.
 
Two other options,

You move out, your former partner rents the present home from you, and you buy somewhere else.

You become your daughter's primary carer & your former partner finds other accomodation.
 
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