Divorce and Negative Equity

lynsalot

Hi guys

One question which I can't get my head around..

When getting divorced nowadays and the negative equity on the mortgage is being split... if one party "decides" they want to keep a property, don't they need permission from the mortgage lenders?

I've recently spoken to someone whose brother re-negotiated mortgage payments to take the property over himself... it doesn't make logical sense to me... or do the banks see any payment better than no payment.

2 years into a separation and living in the property. Making plans with current boyfriend for future and between us we wouldn't be approved for the mortgage I'm currently paying (With my ex) as first time buyers. We more than likely want to buy a house eventually but what happens to the negative equity? Does it become 2 personal loans assuming no contest and equally shared (And I can't see why it wouldn't be in my case)

Thanks

Abi

lynsalot wrote: »

Hi guys

One question which I can't get my head around..

When getting divorced nowadays and the negative equity on the mortgage is being split... if one party "decides" they want to keep a property, don't they need permission from the mortgage lenders?

Hiya Lyns, I'm not sure myself as I've never been through this route.

I've recently spoken to someone whose brother re-negotiated mortgage payments to take the property over himself... it doesn't make logical sense to me... or do the banks see any payment better than no payment.

I know nothing about this stuff, but would his name have been down as the main earner on the mortgage? Its the only reason I can think of. I know when my sister separated the mortgage lenders refused to take his name off the mortgage because he was the 1st applicant on it, and he doesn't even live in the country any more.

Please don't take what I've said as any kind of solid information, as each couples cases have variants and I wouldn't want to dishearten or give false hope. Its just a family experience.

2 years into a separation and living in the property. Making plans with current boyfriend for future and between us we wouldn't be approved for the mortgage I'm currently paying (With my ex) as first time buyers. We more than likely want to buy a house eventually but what happens to the negative equity? Does it become 2 personal loans assuming no contest and equally shared (And I can't see why it wouldn't be in my case)

Thanks

I'm way out of my depth with that one Lyns, and again, all you can hope for here is forum users experiences. For the best possible advice on your own situation, its legal advice you want, so hit the solicitors office.

Best of luck though Lyns, messy situation. Hopefully you'll get through it soon

lynsalot

Thanks Abi,

I know its just experiences I'm after as solicitors aren't prepared to give advice without a consultation fee and it's hardly worth the price if I'll have to go again in 2 years with a possibly different situation on my hands...

Not too messy. Happier now and just an unfortunate circumstance but thats life. Would love some insight into what happens though just so I have my self prepared and can plan for the afterwards!!

Morag

Far as I know it the mortgage exists until it's paid off,
Even after a house with neg equity is sold the remainder stays against the names of both persons who took out the mortgage. If they can get separate personal loans to cover the remainder 50|50 the mortgage can be close out but they are still left with that debt and the damage that does to their credit rating.

Where there is Neg Eq it is hugely unlikely the mortgage provider will remove one parties name and leave the mortgage in one person's name. It maybe possible to switch out one of the original parties with a new person/partner who is willing to take on the mortgage and the neg Eq, if, if the bank/mortgage provider agrees to them.

lynsalot

Thanks sharrow, that makes financial sense alright. I don't want any false hopes going into it. My current partner doesn't earn enough to afford approval with me. Now he's looking for a new job at the moment and its possible he'll earn similar wages before then. But at least we have an idea of what's ahead. Ideally we'd like to walk away and get our own house (Prob like most of the people in negative equity out there!!!) But if it's unlikely to happen which it seems to be, we can save and see what are options are nearer the time.

Thanks for your advice... you'd be amazed how difficult it is to even get a response from the bank on it.

Morag

I think they worry about people who are in the horrors of a break up finding out they are still tied to the other person via the mortgage and doing something daft.

I know someone who's ex took over the house after them footing the whole mortgage for 3 years after the break up and the deal was they would pay it cos they were now living there to start getting letters 9 months later about the mortgage being in arrears.

Tbh we need long term leases in this country, We should be able to rent securely for more then 1 year then a time.

lynsalot

Tell me, how would long term leases help in this situation though?

Ah I can understand the bank's (Building society in this case) being apprehensive but it's bad form not offering some kind of advice in this day and age. There's no equity profit being made here. Divorces are ten times different to how they would have been.

Our separation agreement was that I'd maintain the apartment, pay for damanges, keep it looking well etc and pay for any of that kind of thing. I would rent the spare room and pay the rent to my ex which would pay off 2/3 of his mortgage payment. He's renting elsewhere now. Last year my partner moved in but I drew up a lease anyway to keep things above board. I haven't exactly told my ex who the renter is but my view is he doesn't need to know tbh. The rent's always been paid and I've covered two months when I had no lodger just so there wasn't any hassle.

I've spent a lot of money on the place but I'm house proud so like I've painted twice, bought new furtniture in places, new appliances when they broke. Got an extra lock fitted etc... don't want the money from the ex well because its my home and I want to do whatever I like. Painting wasn't a necessity for example. So things between us are reasonable enough to be honest.

Saying that, considering his behaviour pre break up and during the 3 months of negotations it wouldn't surprise me if he throws all his toys out of the pram nearer the time lol

A quick lightbulb moment... if the place burned to the ground... what would happen??

ur mentor

lynsalot wrote: »

Tell me, how would long term leases help in this situation though?

Ah I can understand the bank's (Building society in this case) being apprehensive but it's bad form not offering some kind of advice in this day and age. There's no equity profit being made here. Divorces are ten times different to how they would have been.

Our separation agreement was that I'd maintain the apartment, pay for damanges, keep it looking well etc and pay for any of that kind of thing. I would rent the spare room and pay the rent to my ex which would pay off 2/3 of his mortgage payment. He's renting elsewhere now. Last year my partner moved in but I drew up a lease anyway to keep things above board. I haven't exactly told my ex who the renter is but my view is he doesn't need to know tbh. The rent's always been paid and I've covered two months when I had no lodger just so there wasn't any hassle.

I've spent a lot of money on the place but I'm house proud so like I've painted twice, bought new furtniture in places, new appliances when they broke. Got an extra lock fitted etc... don't want the money from the ex well because its my home and I want to do whatever I like. Painting wasn't a necessity for example. So things between us are reasonable enough to be honest.

Saying that, considering his behaviour pre break up and during the 3 months of negotations it wouldn't surprise me if he throws all his toys out of the pram nearer the time lol

so he owns 3/4 of the property then? if he is paying 3/4 of the mortgage?

A quick lightbulb moment... if the place burned to the ground... what would happen??

um thats what insurance is for?? you do have insurance..for the replacement cost of rebuilding..not the market value..and insurance to find somewhere to live while being rebuilt?

hondasam

lynsalot wrote: »

A quick lightbulb moment... if the place burned to the ground... what would happen??

It's insured I hope and I assume both of ye are paying the insurance payment.
Insurance would pay the cost to rebuild it. His name is on the mortgage,if ye sell it and make a profit he gets half, if ye sell at a loss ye are both equally liable to the bank.

Munstermad

lynsalot
Hiya, am in similar situation except with ex with head in the sand, kids, arrears and no way of ever being able to make mortgage payments in the foreseeable future... Messy to say the least.
Wouldn't it be great if the government finally moved to the 21st centuary re: family law, and debt processes etc.. help us all climb out of this bloody purgatory..
Best of luck Lynn
S

lynsalot

Hi Munstermad,

I wondered if there was any development in your case if you don't mind me asking?!? I stumbled across this again and was curious how you got on.

Cheers
Lyns

Munstermad

Hi Lyns
No real development tbh, arrears keep accruing, (15k now)and ex keeps ignoring any contact from the bank regarding the mortgage. I am still in the house with 3 kids. Doing what my solr advised which is paying what I can monthly and keeping in contact with the bank. Solr maintains that ex is liable for half of arrears if the banks reposess. Which is very likely but not in the near future. Am looking forward to the day it it resolved tghough whatever that may be, even if it means a life of debt repayments and bad credit ratings. Hate all this uncertainty and don't see a light at the end of the tunnel.. Hopefully the divorece and the bankrupcy legistlation people are talking about might help. How are things with you?

spokesman

lynsalot wrote: »

Hi guys

One question which I can't get my head around..

When getting divorced nowadays and the negative equity on the mortgage is being split... if one party "decides" they want to keep a property, don't they need permission from the mortgage lenders?

I've recently spoken to someone whose brother re-negotiated mortgage payments to take the property over himself... it doesn't make logical sense to me... or do the banks see any payment better than no payment.

2 years into a separation and living in the property. Making plans with current boyfriend for future and between us we wouldn't be approved for the mortgage I'm currently paying (With my ex) as first time buyers. We more than likely want to buy a house eventually but what happens to the negative equity? Does it become 2 personal loans assuming no contest and equally shared (And I can't see why it wouldn't be in my case)

Thanks

Hi, the first thing the banks will do, if one half of the couple wants to take over a mortgage, is the person will have to undergo a financial review,i.e send in your payslips,where you work, what savings and all that . That will decide if they will allow one name on the mortgage. If they are arrears it will be highly unlikely, but equally unlikely once you are paying something, will they instigate proceedings. They are only interested in getting monies .

Regarding negative equity, it depends how much it is. If its not much, and any reliable price forecasts for a few years down the road say prices might rise. He or she might be better paying away and waiting for that day, and then say buy me out;)