Advice on interest only needed!

1939

Hi,

I own a house with my now ex. We broke up a few months ago. I moved out in October and am living with my parents for now. My ex is living in the house, she wants another year to think about things and how we are going to proceed, so we are applying for interest only payments for 12 months on the mortgage so we can keep costs down and that I will have enough to rent while decisions are made. Thing is, applying for interest only, do I be honest and tell it how it is. In theory, I can afford my part of the full mortgage, but I want to rent while my ex makes up her mind. If i pay the full mortgage, I'll be stuck in my parents house for some time. Does anyone know if the bank will accept my honesty, or is better pretending that I cant afford the mortgage??? The forms I got from the bank to fill out are financial statements so I really don’t know the best way to go about this??

helimachoptor

so she is going to stay in the house at a reduced rate while you pay your half and have to pay rent.
I'd get her to pay more of the mortgage (interest) firstly.

The_Conductor

Look at it this way-

Your property is falling in value on a daily basis. Its only going to fall further- as the results of the stress tests on Irish banks are released in a month's time- and as the ECB increases interest rates.

She wants to hold onto this asset that is falling in value on a daily basis. She wants you to pay half the interest on the mortgage- despite the fact that you no longer live there. She wants a year to decide what to do........

That year- could (easily) see another 10% knocked off the sale price of the property- and will have cost you interest payments for the year.

For arguments sake- if the interest only mortgage is EUR1000 a month, and the property is currently worth 200k (figures that I've picked totally out of thin air)- your share of the costs of hanging onto the property for a year would be 6k in interest charges, and 10k in asset depreciation over the course of a year.

Why are you willing to subsidise her living in your joint property for a year, while she decides what to do? Whats to say that in a year's time she won't turn around and say- property prices have fallen further- its not a good time to sell- lets hold on another year. All the time interest rates are going up- and ending up costing you more.

Personally- I would be honest with the bank.

If your ex is willing to (and the bank are willing to allow her) take on the mortgage in its entirety- I would formally, and with the agreement of the bank- transfer ownership of the property to her. I would also get a selection of local estate agents to value the property as a 'distressed sale' and borrow sufficient to cover half of any negative equity that may be associated with the property. I would be upfront and fair with her- she gets half of any negative equity- representing your share in the property- you get to walk away.

There is no good reason under the sun that I can think of- that would justify you not moving on this now. The ongoing cost of a mortgage over your head will sink you- as rates increase. Look at any commentators- the consensus is for a full 1% rise by this time next year- with an April increase not ruled out (though unlikely because of the Japanese crisis).

If you're getting back with the girl- do it, move into your own home and pay your mortgage. If you're not- sell the property- to her if she wants it, if not on the open market. Borrow any negative equity that needs to be cleared on your part- and move on.

Leaving her in situ for a year to make up her mind what she wants to do- is insanity of the highest order.