We have a £50k mortgage on a property valued at £300k. When we separate I would like to take the mortgage over against a new property to avoid an early redemption fee. I have asked my lender if this is acceptable and they have agreed that it can be done but would be subject to my ex's agreement which would need to be confirmed through a solicitor. I've read that when a property has been sold the mortgage is redeemed and the net asset is then split (in our case 60/40). This calculation would give me less towards a new property and I would have to pay the redemption fee. Can anyone tell me why it works out differently? Could it just come down to what we agree if I take the mortgage on and my ex is discharged of the mortgage debt as an individual and we then split the remaining equity after moving costs are deducted.? Sorry hope this makes sense! Any help gratefully received.
Trying to get my head around your post. House with 50k mortgage, worth 300k. So equity of 250k. You're ending up with 150k. However there is a large early redemption penalty (you don't say how much, or whether it's included in the 50k debt or additional to that).
"Can anyone tell me why it works out differently?" : not sure I understand the question.
If you can transfer the mortgage to your new property then it would benefit you both by not having the early redemption penalty. You would have to ensure that XH gets releaased from his covenants under the mortgage. I've never come across a lender willig to do this before, but if they're willing to give it a go, then why not.
You wouldn't deduct moving costs. You only deduct sale costs.
Do you have a solicitor? If not, get one. You need a consent order drawn up as part of the divorce (I presume it is a divorce) to make the deal you have reached a final deal in law.
Sorry it was a bit confusing and thanks for replying. the redemption fee is on top of the 50k mortgage. When H and I were discussing yesterday he confused me by saying that even if I took the mortgage on the mortgage would still have to be cleared at the point of sale.. I didn't get that at all? perhaps he has got wrong, he won't admit it though!