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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