Selling so soon?

RoyalMarine

Hi all..

Bought a house with partner. (Both first time buyers)

Purchased 3 months ago.
My parents footed the full deposit.

We have now separated. And she is moving out.

I can afford the mortgage on my own, but not according to the bank.

I don't want to sell.

What options do I have?

Cheshire Cat

If you have more than 1 bedroom get in a lodger. You can earn up to €14.000 pa tax free. That should help pay the mortgage. Contact a solicitor to make sure your ex can't claim a share of the house in the future. I suppose she's on the deeds?

Wheety

I think the problem is having the ex on the mortgage? I presume you want to remove her name but the bank won't let you take over the mortgage on your own? If her name stays on mortgage and you pay it all, will she have be entitled to a share of the house in future?

Can you show the bank you can afford it?

Not sure if it's doable but could one of your parents go on the mortgage in place of your ex? It would just be in name as you have indicated you can afford to pay the mortgage alone (and you can also get in a lodger if you wanted).

RoyalMarine

I'd considered a parent going on, but they have some property already and not sure if they would get bank approval to take over her commitment.

She's also on the deeds.

We spoke about it, and I trust her not to cause issues. She's happy to remain on it, and even suggested she sign a legal document stating she will hold no claim. But im not sure if that's possible.

I like the idea of renting a room. Didn't know I could rent it and earn up to 14k tax free.
It's a 4 bedroom house. so the options are there I think.

Pawwed Rig

I would get her off the title asap. You are leaving yourself wide open for pain if you do not. Also she will have problems getting finance in future and there would potentially be CGT and CAT implications where you attempt to resolve this later.

draiochtanois

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Lumen

If you can't get her off the mortgage because the bank won't lend you that much I would ask her to contribute half the interest portion of the mortgage repayment, which is effectively the cost of holding the asset (arguably also half the maintenance and building insurance costs, but that might be pushing it).

This way she gets to share in the capital gains (or losses).

If and when the LTV/LTI situation improves you can then buy her out with a new mortgage after having the property revalued.

Admittedly this isn't good advice. Good advice would be to sell the house and buy a smaller place on your own.

RoyalMarine

RoyalMarine wrote: »

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I can afford the mortgage on my own, but not according to the bank.

I don't want to sell.

What options do I have?

Only option is selling it given what detail you've disclosed.

I had a look at your posts on this forum, paying a €200k+ mortgage on your salary is madness IMO, the bank are correct with their viewpoint.
http://www.boards.ie/vbulletin/showpost.php?p=101321780&postcount=54

RoyalMarine

Augeo wrote: »

Only option is selling it given what detail you've disclosed.

I had a look at your posts on this forum, paying a €200k+ mortgage on your salary is madness IMO, the bank are correct with their viewpoint.
http://www.boards.ie/vbulletin/showpost.php?p=101321780&postcount=54

Thankfully my income has significantly increased.
My own take home is approx 3300 per month.

newacc2015

Honestly I would sell it and move on. What happens if the arse falls out of the market in a year or two? You will be trapped in a mortgage that you can't pay and you could end up bankrupt if there is a massive residual debt

Are you holding onto the house as it makes economic sense or the fact your partner and you brought it?

antoinolachtnai

A trip to the solicitor is required. Bear in mind that both you and your ex will need separate legal advice on this so that might impact on whether you go back to current solicitor or not.

You will need a solicitor no matter what you do.

It sounds to me like you can afford to keep the house, if you want it. You could get an independent adviser to give you advice on this. It is an extra expense but it might be worth talking it over to make sure.

Your ex is being very sensible in suggesting she would sign papers in relation to relinquishing her claim on the property since she is not making payments.

Whatever arrangement you have you need it in writing and all legal. I am sure your ex is the best in the world but things happen and people change.

Lumen

antoinolachtnai wrote: »

Your ex is being very sensible in suggesting she would sign papers in relation to relinquishing her claim on the property since she is not making payments.

That sounds like a bad idea since she'll still have joint and several liability for the mortgage.

Glenster

RoyalMarine wrote: »

Thankfully my income has significantly increased.
My own take home is approx 3300 per month.

20K increase in 2 months?

Wow. Its not all bad then.

seamus

You're in an inflating market, it would be silly to stick with the property when you have an opportunity to make a clean getaway. You can walk away with the original deposit, probably with a couple of extra grand for your trouble.

Do it now while the relationship with your ex is still on good terms. You'd be surprised how quickly attitudes can change when friends and family start getting in her ear about claiming what she's entitled to and other such nonsense.

antoinolachtnai

Lumen wrote: »

That sounds like a bad idea since she'll still have joint and several liability for the mortgage.

Yes that is definitely a problem from her perspective, but she will still be liable for the mortgage whether she signs such papers or not and as things stand she is not making any contribution but benefits from having her name on the title and so has a share in the equity in the property. It can be dealt with through an agreement to keep the mortgage current. There are other downsides too, in particular it might make it more difficult for her to get a mortgage in the future. Both parties need to talk to a solicitor.

seamus

seamus wrote: »

You're in an inflating market, it would be silly to stick with the property when you have an opportunity to make a clean getaway. You can walk away with the original deposit, probably with a couple of extra grand for your trouble.

.

It sounds like he wants the house though, if its a house he likes and wants to live there why sell it and buy another if he can manage to get it into his name only (or his name and a parents etc).

Bigger house is also better for going down the rent a room scheme etc.

Michael D Not Higgins

I don't think it's as simple as just taking the name off the mortgage, you'll have to re-apply for a mortgage on your own. This is where the issue is. If your net pay is 3300 then your gross is ~55k per year. If the linked comment from the other thread is accurate, then you don't qualify within the limits of the Central Bank rules since your principal is 218k and your 3.5xLTI amount is 192.5k. Technically, applying for a mortgage again would make you a second time buyer and you would need a 20% deposit, so you're also missing a chunk of that deposit (however, I'm not sure how this situation is dealt with in the event of a separation).

Bandana boy

Have a face to face with the bank . Find out how much needs to be paid of the principle to allow you to be the sole name on the mortgage . Ask them for their advice on what to do , I know a few people who got into your predicament and they all managed to strike a deal with the bank eventually.

drunkmonkey

Sell, Sell, Sell and Give your folks a cut of the profits.

Michael D Not Higgins

drunkmonkey wrote: »

Sell, Sell, Sell and Give your folks a cut of the profits.

I don't see much profit in selling a house only bought 3 months ago. Even if there was a small increase, it'll be eaten up in legal fees alone.

seamus

Caden Ripe Funeral wrote: »

It sounds like he wants the house though, if its a house he likes and wants to live there why sell it and buy another if he can manage to get it into his name only (or his name and a parents etc).

I'm assuming that option is off the table, his bank has said no.

He's only two months into a salary increase, the bank will likely want to see that continue for a year before they entertain it as a stable income. Wait a year and his ex will likely have changed her tune and want a cash payment to be taken off the mortgage.

Unless his parents are exceptionally young, getting them onto the mortgage may result in a much messier scenario with higher repayments.

Guarantor isn't really an option anymore.

A house is just a building, bricks and mortar. There are thousands more of them out there. Hanging onto a place you've only owned for 3 months just because you like it would be silly when the complications it comes with have the potential to financially ruin you.

Mrs OBumble

How long were you together? That said, it really is solicitor time for both of you.

What do you see yourself doing with your life? Is having a house compatible with that? (I realise it may be too early for you to tell). if you can find a way to make the money work, then it may make sense to keep the house, at least until you can re-coup the cost of sale from renting out rooms.

Askthe EA

Knowing someone in a similar situation who is now screwed as they bought in the boom in the arse end of nowhere, I'd be inclined to sell up and move on with your lives. The only drawback I would caution is that you are no longer considered a FTB and will need 20% deposit for your next purchase. Sorry to hear of the separation btw! Chin up!

antoinolachtnai

The OP is also likely to make a loss on the overall deal when all the expenses (estate agent, stamp duty, solicitors fees x 2, early redemption penalty is there was a cashback or other arrangement on the mortgage) are taken into account. And there's also that loss of FTB treatment. So depending on the circumstances, it might be worth a bit of strain for the OP to hang on. Sorry to hear of the OP's separation.

Glenster

seamus wrote: »

I'm assuming that option is off the table, his bank has said no.

He's only two months into a salary increase, the bank will likely want to see that continue for a year before they entertain it as a stable income. Wait a year and his ex will likely have changed her tune and want a cash payment to be taken off the mortgage.

Unless his parents are exceptionally young, getting them onto the mortgage may result in a much messier scenario with higher repayments.

Guarantor isn't really an option anymore.

A house is just a building, bricks and mortar. There are thousands more of them out there. Hanging onto a place you've only owned for 3 months just because you like it would be silly when the complications it comes with have the potential to financially ruin you.

Yeah, but what are you going to do with the deposit? presumably give it back to parents. No guarantee that they'll give it again the next time. besides you'll need another probably 30K to reach the 20% deposit if buying again in the future.

It looks as though you can easily make the repayments, bank are probably a bit skittish as you didn't save the deposit yourself. Meet with the bank and politely ask your options, if they don't let you keep the mortgage, Save like a pig over the next few months while continuing to talk to the bank, they'll crack. There are capital rules and stuff but they actually are reasonable.

That said, it sounds like there is significant variability to your monthly income, if there is even a chance it will go down to what it was before I'd take the hit.

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Rackstar

Glenster wrote: »

20K increase in 2 months?

Wow. Its not all bad then.

Sorry to hear about the dilemma you are in.

Do the bank know about the increase? With that sort of increase you should qualify for a 200k mortgage. With your take home you should be earning 60k+

newacc2015

Mrs OBumble wrote: »

How long were you together? That said, it really is solicitor time for both of you.

This is the exact approach I would avoid. What is the point of racking up thousands(possibly tens of thousands) of legal fees if the bank have said no to a mortgage? Don't throw good money after bad

Mrs OBumble wrote: »

if you can find a way to make the money work, then it may make sense to keep the house, at least until you can re-coup the cost of sale from renting out rooms.

And what happens if house prices decline by 5% over the next year? OP could find himself in negative equity rapidly. Selling a house is not cheap, but it not so expensive that he needs to save for a long period of time to do it

OP has an opportunity to get out of a mortgage with an ex. There are thousands in negative equity who would jump at this

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As will another house if he buys one instead, not like they will disappear.

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RoyalMarine

Hi all.

Thanks for all the comments.

We have had a serious discussion today, with a friend who is a solicitor.

We have both agree'd to keep the house in both our names, and pay 50% of the mortgage. I'll pay the bills, and remain living here.
She is going to move out.

We will sell in a few years, and split everything 50-50.
I get a house to live in, which I love.
She moves out.
We both have a semi reasonable investment.

She's not the type of person to go ape **** banana's in 12 months time looking for money. She has a real head on her shoulders when it comes to this stuff. We split for a valid reason, not due to arguments etc, So I think it's all good there.

And we were together for 3 years. Not the longest, but not the shortest either. In the end, we bought it as an investment and a place to live.
Ill still be using it for both, her just for one.

Either way, I think were both happy with the outcome. No expensive solicitors involved for both, no issues with the bank, no issues with repayments etc. We will keep our joint account open with standing orders paid directly into it for the mortgage.

All in all I think it's a good scenario. We were friends for years before, so we trust each other.

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Eric Cartman

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welcome to the issue every man who's ever divorced in this country has faced.

James 007

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Sounds like a threesome required in this case, all jokes aside, if new lady moves in is she then entitled to a share of the house if living there for over 2.5-3 years or is this incorrect.

RoyalMarine

deposit is sorted between myself and parents. once house is sold, deposit is taken out first, profits split.

if new lady enters the equation, then we re-evaluate it then.
could possibly look at buying her out at that stage.

antoinolachtnai

This is not a good outcome for you. You (and your ex) need a solicitor of your own, on record, paid a fee. Any agreement you make without separate solicitors and legal advice isn't really going to be binding, certainly not the agreement you have proposed.

I don't mean to be ageist, but you really need an old hand of a solicitor for this sort of stuff. You want someone who has been doing legal comings and goings with family property for at least 20 years. I have a feeling your advisor is more like your own age.

Solicitor fees will probably be less than two mortgage payments. That is 1/150th of the total amount you will pay back on the mortgage. If you get the best advice and come to a good agreement, it is honestly the best money you will ever spend.

It is very likely you will end up in a dispute if you go down the road you are on. I would say that there is a better than 50-50 chance. If you end up in a dispute over this, it will likely end up with counsel and the High Court because of the value of the asset. It will cost you in the order of €10,000 euros even if you don't go to Court. That is likely to destroy the whole profitability of the investment. You should make sure your solicitor friend's advice is in writing, so that you can recover those fees from his insurance company at that time.

Quite apart from the money side, you face the very real possibility of having your home (which you say you love) sold from under you at any time with very little notice. Your ex will not want to do this to you, but if her circumstances change (for example, if she needs to buy a house of her own, or loses her job) then she will have little choice.

Having trust in your business partner is a great start. I admire you and your ex for having the courage to sit down and discuss this face to face and try to come to an agreement that works for both of you. You still need a written, binding legal agreement. This is probably the biggest business matter either of you have ever dealt with and may be the biggest one you ever deal with.

I would also add that this is not a suitable investment vehicle for either of you.

Tigger99

RoyalMarine wrote: »

deposit is sorted between myself and parents. once house is sold, deposit is taken out first, profits split.

if new lady enters the equation, then we re-evaluate it then.
could possibly look at buying her out at that stage.

You are assuming that a sale would result in profit. What if you make a loss or not enough to give your parents back the money. You are making a lot of assumptions about the future. I think spending money on a solicitor now could end up saving you a lot of heartache down the line.

Water John

Assuming your going with the arrangement ye have come up with, I'd say get some tenants in ASAP. The 12/14K can be used to lower both your payments.
I'm sure both of you will appreciate that. For little ongoing financial input both of you have the possibility of a dividend on a house sale in the future, or you buying out her share.
You have a roof over your head. I would use the time and lower cost to put as much money aside as possible. This will give you a lump sum and thus options.

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Mrs OBumble

RoyalMarine wrote: »

We were friends for years before, so we trust each other.

But yet you split up three months after you bought a house together.

<mod snip>

Go and see a solicitor who has experience in family law

Pawwed Rig

Your ex cannot claim rent a room scheme by the way. She will be taxable on her portion of the rental income at her marginal rate.

newacc2015

RoyalMarine wrote: »

Hi all.

We have both agree'd to keep the house in both our names, and pay 50% of the mortgage. I'll pay the bills, and remain living here.
She is going to move out.

We will sell in a few years, and split everything 50-50.
I get a house to live in, which I love.
She moves out.
We both have a semi reasonable investment.

And what are you going to do if the property market starts declining in 12/18 months? You have assumed house prices can only go up which is clearly not the case

Is she entirely comfortable losing tens of thousands if the house has to be sold if it is in negative equity? Are you comfortable with the fact you might not be able to sell the house if its in massive negative equity?

seamus

antoinolachtnai wrote: »

This is not a good outcome for you. You (and your ex) need a solicitor of your own, on record, paid a fee. Any agreement you make without separate solicitors and legal advice isn't really going to be binding, certainly not the agreement you have proposed.

I don't mean to be ageist, but you really need an old hand of a solicitor for this sort of stuff. You want someone who has been doing legal comings and goings with family property for at least 20 years. I have a feeling your advisor is more like your own age.

Solicitor fees will probably be less than two mortgage payments. That is 1/150th of the total amount you will pay back on the mortgage. If you get the best advice and come to a good agreement, it is honestly the best money you will ever spend.

It is very likely you will end up in a dispute if you go down the road you are on. I would say that there is a better than 50-50 chance. If you end up in a dispute over this, it will likely end up with counsel and the High Court because of the value of the asset. It will cost you in the order of €10,000 euros even if you don't go to Court. That is likely to destroy the whole profitability of the investment. You should make sure your solicitor friend's advice is in writing, so that you can recover those fees from his insurance company at that time.

Quite apart from the money side, you face the very real possibility of having your home (which you say you love) sold from under you at any time with very little notice. Your ex will not want to do this to you, but if her circumstances change (for example, if she needs to buy a house of her own, or loses her job) then she will have little choice.

Having trust in your business partner is a great start. I admire you and your ex for having the courage to sit down and discuss this face to face and try to come to an agreement that works for both of you. You still need a written, binding legal agreement. This is probably the biggest business matter either of you have ever dealt with and may be the biggest one you ever deal with.

I would also add that this is not a suitable investment vehicle for either of you.

All of this OP. I know you think you have a great plan put together, but it's based on a lot of assumptions which you cannot possibly take for granted;

- That your salary will be stable or increasing
- That your ex's salary will be stable or increasing
- That property prices will continue increasing
- That your ex will not change her mind under any circumstances
- That future partners of either you or your ex will not try to take a stake in the property

The amount of people everyone here knows who bought with a partner during the boom, split up and are now stuck tied to someone they haven't gone out with in 10 years, is frightening.

A friend of mine was going out with a guy for 18 years, bought a house, split up 18 months later. He said at the time that he'd just sign the papers, let her have the house with no claim on the money he put in, the break up was all very amicable. She decided to let it lie for a while. He went off travelling/working to find himself or some nonsense and arrived back 9 months later talking about being short of cash and looking for a significant cash sum now to sign the house over.

When it comes to money and friendships, do not assume the rules that held true in the past will hold true when you're both tied to a large asset. The rules are now different.

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asteroids over berlin

love is a dangerous thing, i would cut your losses and sell and try and break even. Whilst your ex may indeed be a nice level headed person, she may fall in love again and the guy may have different ideas/views, this can influence her and she may change!! Particularly in the current property market (which is only going to keep climbing) - Sell now and try and buy asap

spaceHopper

Tell the bank you need to take her name off the morthage, give them evidence you can afford it and rent out two of the rooms as soon as possible. While you don't have much choice neither do they. If they don't agree to it they would have to go to court to forecolse and they would look very stupid in front of the court if you are not in arrears

JuliusCaesar

spaceHopper wrote: »

Tell the bank you need to take her name off the morthage, give them evidence you can afford it and rent out two of the rooms as soon as possible. While you don't have much choice neither do they. If they don't agree to it they would have to go to court to forecolse and they would look very stupid in front of the court if you are not in arrears

Go and talk to a number of different banks, see what they all say - don't accept that what one bank will say will apply for them all. You will need to take out a new mortgage.

While you are doing this, get in a few lodgers up to the limit of 12k per year.

Save like crazy, while paying the full mortgage.

How long would it take you to get up to a viable interest in the house? Can you hold off with your ex for that amount of time? WITHOUT her paying towards the mortgage at all. How large are your mortgage repayments? How much equity do you have in the house (i.e. how much is the house worth minus how much you owe)? How large was the deposit? Can your parents wait to be repaid?

cronos

JuliusCaesar wrote: »

While you are doing this, get in a few lodgers up to the limit of 12k per year.

It's 14k, not 12k

RoyalMarine

We reviewed all feedback from friends, family, you guys and others etc.

Best we go separate ways now rather than later.
Getting a lodger and taking full mortgage myself. Will save like crazy, repay full amount, and prove to the bank I can do this.

Thankfully it's a very large new 4 bed house so it shouldn't be impossible to find 1 or 2 tenants.

Spanish Eyes

RoyalMarine wrote: »

We reviewed all feedback from friends, family, you guys and others etc.

Best we go separate ways now rather than later.
Getting a lodger and taking full mortgage myself. Will save like crazy, repay full amount, and prove to the bank I can do this.

Thankfully it's a very large new 4 bed house so it shouldn't be impossible to find 1 or 2 tenants.

Best of luck.

Remember lodgers are NOT tenants. They do not have any rights, they are licencees. You can kick them out at any time.

AND you have a potential €14 grand a year in rent tax free as long as you are living there too.

The potential pitfalls are frying my brain now. Hope you have covered all angles.