The financial conundrum and solutions

JohnMorris78

Hi all, separating from my wife. We have 2 kids under 10. Naturally my concern is for the kids to have a good stable home. I agreed to leave after suggesting the divorce - to give us cool down time. Am with family for the moment. We need a longer term solution though that will allow the boys stability.

thinking of ways I can support my ex to stay in the home - while also not being stuck without one myself. Am a teacher so salary is not huge, can’t pay two mortgages.

has anyone experience of building a granny flat in their garden and renting that as a way to create rental income. Could be a way to supplement mortgage. Other ideas also welcome for ways to make this work. Thanks.

John, i hate to see your post left with no replies, but there is no simple answer to your question.

The most honest answer is that no matter how it works out, in a separation, both parties are going to feel a sharp reduction in their living standards.

Does your ex partner work? Personally, I feel that after separation the option of one parent being a stay at home parent is not really feasible, at least not once kids are of school-going age.

I'm sure you've read some of the other threads here by now. Leaving the family home is not a good idea, and does not put you in a good position.

Building a granny flat in the garden to rent out may seem like a good idea on paper, but rental income is taxed and if benefits ever needed to be claimed, would be treated as income.

You can book a consultation with FLAC - you need to get some legal advice on what happens next, and also, www.treoir.ie is a very valuable source of information.

Hi John,

I'd check out my options with your local authority if I were you, assuming you haven't done so already. There have been a number of housing changes which directly, and explicitly, affect separated/divorced people and have become law since January this year, 2022. Most importantly, separated/divorced people are treated as first time buyers now. Read this: https://www.independent.ie/business/personal-finance/property-mortgages/fresh-start-new-proposals-to-treat-divorced-and-separated-couples-as-first-time-buyers-41387049.html

These range from low-cost loans with the Local Authority Homeloan section (a national organisation: https://www.citizensinformation.ie/en/housing/owning_a_home/help_with_buying_a_home/local_authority_mortgages.html) to the Affordable Purchase Scheme. The Local Authority Homeloan takes into account maintenance payments so be wise to the fact that if you are paying maintenance this will reduce the amount of mortgage you will be given. Do not agree to maintenance or anything else without becoming fully informed of how it would affect your housing. You need to develop a holistic view of everything here. I didn't see much benefit in the Local Authority Homeloan (there are cheaper mortgage rates available from banks like Avant, for instance) and, in Dublin, the price of the home is limited to €320,000, which can be very problematic if you need to find a multiroomed place for your children to stay. It's worth checking out, however.

The Affordable Purchase Scheme, on the other hand, is the only scheme which allows you to get a place for €320,000 where the value is worth more (they're sold to the local authority for €320k). In my local authority the APS constitutes 10% of housing in the local authority, with social housing being another 10%. These may not be available for 18 months-2 years but will be allocated on a first come, first served basis earlier than that so have everything ready. There is, however, a €65,000 salary limit for a single person. (double check all of this as I'm going on my notes from my phone conversation)

The Help to Buy/HTB scheme is much more flexible, but it is only available to self-builds/new builds. It can also cover up to 70% of the deposit and it's a tax rebate of the tax you've paid in the previous four years. You can use the loan to buy and build on land, but the market value of the completed home must be under €500k max. Latest, January 2022, update on this scheme: https://www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/help-to-buy-stats.pdf

Importantly, as a separated/divorced person is viewed as a first-time-buyer since January 2022/this year in the HTB you can get up to €30,000 towards a home deposit (in the form of a tax rebate) under the enhanced HTB: "The enhanced HTB relief provides that where applicants satisfy certain conditions, increased relief is available up to a maximum of €30,000, or 10% of the purchase value. This enhancement has since been extended until 31 December 2022." [ https://www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/help-to-buy-stats.pdf]

https://tinyurl.com/2p9yepjm

In terms of renting options, there will also be approved housing bodies in your local authority area. Tuath, Cliúid and Respond Housing are some of the main ones in my Dublin local authority area. There are others which deal with preventing homelessness. However, with these you never own the property. Furthermore, you have to be on the local authority housing list to access them. Finally, cost rental properties will be coming on stream (part of the APS/Social Housing above).