Posted on 22 March 2010 by Lauren
Options after split?
Hi there, after 4 years together sadly my partner and I are no more. We have had the mortgage for 2 years which is in his name due to my previous bad credit rating which had now inproved. Neither of us can afford the mortage on our own and fear difficulty selling. We bought the hous valued at £145K for £139K and have a mortgage outstanding of £130K. An identical house on the street has not sold for over 1 year. What options do we have? Can we pay interest only or have a payment break for 6 months? Are there any quick ways of selling - we are not interested in profit. Would you advise renting the house out? I technically could walk away and leave up to him but want to do the right thing as care for him and his family. Please help, are there any other options that I may not have though of that could be discussed until a suitable agreement is reached?
The first thing your former partner should do is speak to his mortgage lender. It may well be possible to switch to interest only payments for the short term and this could buy you both the breathing space required to decide what to do with the house. I doubt that the lender would grant a payment holiday, because the interest due would build up and there is not much equity between the mortgage amount and the value of the house to absorb this.
I do not think that renting out the property is going to be a viable option. The existing mortgage lender is unlikely to grant a 'consent to lease' unless your former partner can demonstrate that he needs to move for reasons beyond his control, such as having to temporarily having to relocate for work and he would have to substantially reduce the balance of the mortgage to qualify for a buy to let mortgage.
I note your concerns re selling the property and this is where you need to speak to a reputable local estate agent. They will be able to advise you of the highest sale price that will allow you to achieve a quick sale and you can then decide whether or not it is feasible to pay off the mortgage. Your partner will have to weigh up the costs of a quick sale against holding out for a higher price and having to maintain the mortgage until then.
Finally, has your partner consider taking in a lodger? You can 'earn' up to £4,250 a year before you pay tax and this might just be enough to let him stay in the property.
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
We recommend you seek professional advice with regard to any of these topics where appropriate.