So my sister in law is getting divorced and is currently living at our house and her son is with her half the week.

The plan was for ex to stay in the house and re-mortgage to release equity out of the property for her.Found out yesterday that he can’t do this as there’s not enough money left in the house for him (i think after taking a bit more out to pay off some debts).

He has asked that the mortgage stays as is for the next 2 years, they currently have 2 years to run on a fixed rate or would face fees to get out. He will pay the mortgage on his own and in 2 years, will re-mortgage and should be ok due to the extra he’s paid in.

Original plan for her was to rent for 6 month and then look for a place to buy. Now i know she won’t have a deposit now, but if mum and dad came along with some cash for her deposit, could she get a mortgage? She will still be named on the other mortgage even though shes not paying anything towards it.

Is there something that can be put in place for this to happen so there’s no comeback/restraints on her getting a mortgage or will she have to force him to sell up?

I’d have thought having a mortgage in her name would affect the value offered by any lender.

I work for a bank training mortgage advisers.
No, generally she won’t be able to get another mortgage unless she can show that her income can cover both. Also, some res lenders have criteria that state if you own another property or are on another mnortgage you cannot borrow more than 75% LTV, which means a big deposit.
What do you mean by ‘there’s not enough money left in the house for him’ ?
the planned ltv will be higher than criteria allows? like over 90% for eg?
if this is the case then just ask to borrow less.
He could do the transfer of equity to just release her from the mortgage and keep the mortgage as it is. This would allow her to get another mortgage in her own name with whatever ltv she wanted. He could then remortgage again once (if) the property increases in value to give her some of the equity.

Find yourself/her a good independent financial adviser who gets his fee direct from the mortgage companies i.e. so you are not charged directly for his services.

Different lenders have different criteria, the adviser will know what is possible in her situation.

Thanks all.

Jekkyl -by “not enough money left” i mean they have equity of approx 25%, take off some debts and its knocked down and then split means he’s looking at 7-8% equity left in the house so would be need a 95% mortgage.

They’d been to see an independent mortgage person who had applied for this and had it knocked back.

Situation keeps changing daily so its a mare keeping up with it and working out if things are in here interest or not.

If he can’t buy her out immediately I would suggest she should be asking that the house is put on the market and proceeds shared equally so she has a clean slate and a deposit.

If she buys another property while she still has an interest in the current property she will incur an additional 3% stamp duty charge as she is effectively buying a 2nd property.

If he can’t buy her out immediately I would suggest she should be asking that the house is put on the market and proceeds shared equally so she has a clean slate and a deposit.

This, she shouldn’t be in a worst situation than him (and I’m not taking sides, don’t know the backstory to the divorce). There’s a lot of ifs, buts and shoulds in the situation he’s proposing. Not the least his potential argument that he’s paid x pounds on his own into the mortgage in the coming years and will want that taking off any equity. In unlikely event of property crash in a couple of years then even worse.

Also the possibility that when he comes to remortgage the bank would refuse it on insufficient income to cover the payments.

Any divorce proceedings will presumably need a clean slate agreement so it could be that they would have to sell anyway. Unless the mortgage fees would wipe out any equity I suspect best to sell, or he gets a loan out to cover the equity.

Plus two years on not paying off her own ‘new’ mortgage possibly?

Agree with putting it on the market.

Hadn’t thought about the extra stamp duty so even more reasons for her to sell and be clear.

Thanks all

Absolutely no guaranty he will get a mortgage at all in 2 years, what if he is unemployed ? What happens if he defaults of mortgage in the meantime and property ends up getting sold for less ?

Very very risky to let him stay in the house on this basis.

Err what about the son in all this? Best the couple can do is go about this amicably and give some sort of stability by one of them keeping the family home as appears to be happening, if the hubby can downsize but stay in the same area all well and good but if not she might just have to wait it out those couple of years for the sake of her son.

Pretty much ever lender on a residential mortgage will reduce the amount that they will lend by the amount of mortgage that she already has.

She will still remain liable for the mortgage payments, so if ex refuses to pay then the bank can come after her.

I strongly suggest selling up and going separate ways. Or he remortgages into his name only (without taking out a lump sum). She could take an IOU and put a second charge on the property to enforce it. If he can’t get a mortgage in his name at all, sell up and both of you take cash away.

Thanks all.

Jekkyl -by “not enough money left” i mean they have equity of approx 25%, take off some debts and its knocked down and then split means he’s looking at 7-8% equity left in the house so would be need a 95% mortgage.

They’d been to see an independent mortgage person who had applied for this and had it knocked back.

In that case why don’t they just transfer everything to him, and then pay over the 7/8% in cash to your sister in law?

In that case why don’t they just transfer everything to him, and then pay over the 7/8% in cash to your sister in law?

From experience you can’t just take on a joint mortgage singularly, you have to apply for a new mortgage or that’s what my wife’s mortgage co have told us, so in this case exit fees would still apply.

From experience you can’t just take on a joint mortgage singularly, you have to apply for a new mortgage or that’s what my wife’s mortgage co have told us, so in this case exit fees would still apply

Yup. And make a new entry with the land registry. And pay stamp duty if it is due (which doesn’t arise on divorce).

You are transferring ownership from “A+B” to just “A”. And the same with the mortgage liability. If the mortgage company decide that they don’t want to lend to the single owner then that’s their commercial decision to make.

Is she fit?

From experience you can’t just take on a joint mortgage singularly, you have to apply for a new mortgage or that’s what my wife’s mortgage co have told us, so in this case exit fees would still apply.

‘Twas a long time ago (late 90s) but I did this and took over an entire mortgage (after persuading the bank that I could afford the repayments alone) and my ex GF went to a solicitor and signed over her rights to the house to me.

I was in this situation (changing a joint mortgage to my name only) a few years ago. The mortgage company wouldn’t take the ex’s name off the mortgage so I had to re-mortgage in my own name.

Is she fit?

+1

Standards are slipping, cant believe the thread got this far

I was in this situation (changing a joint mortgage to my name only) a few years ago. The mortgage company wouldn’t take the ex’s name off the mortgage so I had to re-mortgage in my own name.

From memory my ex GF was left on the mortgage, but we both signed a deed of some sort via solicitors that meant that I guaranteed her liability, and she had no call on future rises in value. I obviously paid her over her share of the (almost zero) equity at the date she moved out.

No need to remortgage, or pay stmap duty etc.

My feeling is she is getting taken advantage of here. It is a big risk for her getting a new mortgage if she is still involved in another property, even if she isn’t paying anything.
Probably best to sell the property and start afresh.

johndoh – Member

If he can’t buy her out immediately I would suggest she should be asking that the house is put on the market and proceeds shared equally so she has a clean slate and a deposit.

this. Its the only answer

No one else think that the sons best interests should be the priority here then?
I couldn’t afford to buy my ex out 50/50 so we agreed to give the kids a share in the house instead – I now owe them a bloody fortune but it kept the family home as a roof over their heads at the time.

@dickyboy makes a good point.
My sister’s ex husband walked out and in this case there was no option but to sell the house, try as much as we wanted to keep her there, the mortgage would just have been too big.
But since then she and her two kids have had to live in various rental accommodation, which has been expensive and unstable. It is f-ing heartbreaking to watch, and as of today has just been given a month’s notice to leave a place she had been told was her’s to rent long-term (owned by a Baptist church, funnily enough).

She tried to get a new place but just didn’t have enough in salary to get a mortgage, even with my parents help.

But I’m assuming in this case, both partners would have enough (both in deposit and ability to get a mortgage) to buy two separate properties should sell the house? If that is the case, then selling up might be a better idea – but I would get the OP to ask his sister to see a mortgage adviser and work out exactly how much she can borrow for her own place asap.