House nightmare!

[artlessflirt]

I'm looking for some advice. It would be nice to know if anyone has ever been in this situation, or similar, and how they found there way out of it. I'll try to keep it brief.

My partner joint owns the house we currently live in with an ex. They have been split up for 6+ years and she has not contributed to mortgage or upkeep since.

Our house is an old-fashioned terraced house and I hate it. I feel that it is not our home, and that there is too much water under the bridge there, if you know what I mean.

My partner recently got the house valued. He has almost 60k left on the mortgage, and the house was valued at 50k. There is work that needs to be done on it - it needs a new kitchen and bathroom. But I am reluctant to spend 10k+ on this work when I have no love, or indeed stake in the house.

We basically have no idea where we go from here. The estate agent who came to value it said that many people in our situation have handed the keys back to the mortgage company. But presuming we did that the house wouldn't fetch more than 30k at auction, and my OH would still be owing what is left on the mortgage and probably would not get another mortgage.

What can we do? Can we sell up and cut our losses by bolting on the 10k deficit to our next mortgage? I have never done this before and I'm totally heartbroken by the valuation and generally just feel trapped.

Can anyone help?

[YelloDraw]

Ugh what a shitty situation. I assume it was bought in 2007ish somewhere up north where prices haven't recovered?

The easiest way would be to massively overpay on mortgagee as much as possible over the next two years to get the principle amount down low enough so you can sell.

Can you rent it out and you and DP rent somewhere else? Would be a pain and there is a lot of faff and you would probably be financially worse off but at least you would be out of the house you hate.

[KindDogsTail]

It sounds very difficult for you.

As the house is valued at £10,000 less than
your husband's mortgage I presume this means your husband's ex-partner would not get any of the money.

Is there any chance that if you spent just a bit, cleaned it up, got rid of dirty worn stuff, did a bit of extreme cleaning, clearing up and painting - like we see on the television with people like Sarah Beeny, you could get a bit more than the agent thinks? Maybe if you sent some pictures Mumsnet people could give inexpensive hints.

If worse comes to worse, £10,000 too little is not as bad as it could be, so just getting out of this house, where you are not happy, and choosing something new together, might give you a lot of pleasure in the end.

It might be worth asking two other agents to value your house as well.

[KindDogsTail]

Sorry, I was muddled. Would your husband's ex-partner get some of the proceeds, £25,000, leaving him with the negative £10,000 mortgage?

How much mortgage could he have for the new house, including the outstanding 10,000?

[EnriqueTheRingBearingLizard]

I don't think I'd try renting it out and then renting elsewhere. You'd need to spend some cash on updating it to get a decent rent, you'd incur maintenance costs and you'd be taxed on the income.

My answer would depend on if you have any savings at all towards a deposit? You might be allowed to port your morgage depending on your income and the property you wanted to buy. You'd need specific advice on that from the lender, particularly regarding ex partner who's named on the property too.

What is your DP's arrangement with his ex? There'snegative equity now, is that joint or down to DP? if solely down to DP would ex agree to be removed from the Deeds? it's a bit complicated isn't it. I think you need that clarifying before anyone knows what's best.

Meanwhile could you spend just a little on making the house look a lot more modern inside? Cushions, pictures, bedding and so on? all relatively cheap and would at least give the illusion of freshening the place up a bit.

[Imperialleather2]

What is the ex's situation? They're both joint and severally liable for the debt but it woukd be for the mortgage Co Tonouraue her and.in the meantime potentially ruin your credit rating.

Is there no way you could.like the house? Eg.instead of losing £10k.spend.£10k on it ams make.ir.somewhere.you like?

A horrible.sutuation for you.

Do you have the spare £10k to redeem the mortgage??

[artlessflirt]

Thank you all.

I have money put aside that could be spent on a deposit, around 10k.

Loathe to use it on the house though! And that sounds selfish but it's money that has been saved up by my parents for my (eventual) wedding. But we've come to the conclusion that the house is more important so that money would go towards a deposit.

I will never have any love for the house. I tried to love it by redecorating, we repainted, bought a new sofa, bought new furniture, etc. But there's just stuff that I can't get over, and if that's precious I don't particularly care.

The agent suggested doubling our mortgage payments to try and get it breaking even quicker, so that's an option!

In terms of his ex, we could not physically give her anything if we sold and got 50k for it. I don't know where she would stand in terms of the debt, I hadn't thought of that. I know my OH has spent a lot more than 10k in payments over the years. Such a rock and a hard place right now!

[Bertieboo1]

We had this on our first house. We doubled mortgage payments and managed to 'break even' when selling (although in reality we lost money but it was going to take years to get up to previous value). It was around 10 grand as well. We decided in the end that moving and starting a family was more important than hanging around in the 1 bed for years.

[LIZS]

It rather depends how the finances and ownership is shared between dp and ex. If she is named her permission would need to be sought for sale or rent. She may well want to hold out until there is equity to share rather than ongoing debt. If the mortgage is currently interest only then it may require renegotiation to pay off capital, or there may be an annual limit.

[user1471549018]

Some mortgage companies will let you port the mortgage with negative equity. Have a chat with a broker. I think it would be very difficult to get the ex to be jointly liable for the debt in reality, so I would just get her removed from the deeds (which presumably she would be very happy with!)

[artlessflirt]

LIZS, I'm afraid there may never be equity in it!

With new builds going up near us all the time, no one wants to buy terraced housing unless they want to develop them and rent them out. And of course they aren't going to pay full whack when it needs extensive work done to it.

I think our way through may be doubling mortgage payments until we are at a point where we break even or where the equity isn't as much. But I'm desperate to leave and that just makes me feel sad!

Think we may need to chat to the mortgage company and see where we stand

[EnriqueTheRingBearingLizard]

Do that then OP.

If you don't want to spend another bean to try and make this house more hospitable, then go all out on information gathering, with the mortgage company, with an independent advisor, with the ex. At least then you'll know what's realistic and then you can make your plans accordingly.

Sometimes when we know exactly what's what, even if it's not the best situation, we grit our teeth and press on more easily.

[LyraMortalia]

Number one get the ex out of the picture buy her out for £1 or whatever you need to do officially then you might feel slightly better. Don't overpay until you've done that. Then I would convert to a btl (in dp name) and buy in your own name (saves stamp duty). Use your deposit to secure a home for yourself use the rent to pay the mortgage interest only until you have a reasonable slush fund then start repayments. In ten years you will have a home and a rental.
Once the ex is out of the picture if it's not rentable or saleable get a kitchen/bathroom refurb company in unless dp is really handy they will save you a fortune. You can do this you just need to imagine where you want to be in ten years, break that down into little bits and do a bit at a time.

[KindDogsTail]

What clever ideas you have LyraMotalla. Would it not be expensive though to convert it to a buy-to-let now that there are more duties imposed and fewer tax breaks for buy -to lets (I don't know the details though)?

It does sound a good plan though, if the rent would cover the buy-to let interest and Artless and her DP can afford the new mortgage, and the costs of buying the new house (legal fees, mortgage set up etc). WIth rental houses, you always have to watch out though for bearing in mind that a tenant might not pay, or there could be a space between one tenant leaving and anoter coming in. And there must always be some rent money kept back for this eventuality, repairs and tax.

It does sound clever though in my opinion Artless. It would be good to hear what other people think.