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Divorce/separation

Here you'll find divorce help and support from other Mners. For legal advice, you may find Advice Now guides useful.

Original poster

FInancial Settlement - how likely is it H will get a future share of the equity rather than a fixed sum?

40 replies

HenriettaBarnet · 05/05/2015 15:25

H and I are having an acrimonious divorce. We have been together for many years and bought our first house 20 years ago. That said we haven't particularly benefitted from the property market and we bought a house last year and have 22 years left on the mortgage to run. There is about 200k in equity.

In 22 years, H reckons the house could be worth 2m (it is in London) so he wants half the equity in 22 years. He has said he will accept 1/3 of the equity. I do not want to give him this. I have to bring up the children (our youngest is 2) on my own for 22 years. he is adamant it is right he will get this. He has no pension.

My solicitor says I don't have to worry, he won't get the equity. But I am worried!

Can anyone advise on this? I suppose I am happy to give him a share of the equity at today's value (albeit in the future as I can't buy him out now).

Thanks!

OP posts:
noddyholder · 05/05/2015 15:31

Are you buying him out?

noddyholder · 05/05/2015 15:36

My friend negotiated the house as part of settlement (after much to ing and fro ing) and he gave up any future equity while she gave up any right to his pension.

moonfacebaby · 05/05/2015 16:19

I've got a mesher order in place - my exH has to pay the mortgage until my youngest leaves full-time education - she's 3.

I get 67.5% of the equity on the sale of the house.

He's a high earner. I'm not - but I also look after the kids (we have 2), as he can only have them at weekends as he lives too far away.

I couldn't take the mortgage on or buy him out as out mortgage is £196,000, and I don't earn enough.

Are you taking on the mortgage? Or is he continuing to contribute? If he isn't, then I'm pretty sure he can't get the equity in 22 years time - why should he? He hasn't been paying the mortgage!

Original poster
HenriettaBarnet · 05/05/2015 16:22

Unfortunately he doesn't have a pension (which is why he wants the house).

I would buy him out, but defer the actual buying out (as I can't raise any more money at the moment). So I would give him a share of the equity at today's date, but in a few years time.

I'm willing to give up quite alot to get the house actually, including a lower maintenance figure. It isn't worth much at the moment (well it is, but the mortgage is very high so there isn't much equity in it). I want to keep it though as I just couldn't afford anywhere in the area for me and the children to live and I don't want to move them away from their home and schools.

I just don't see why I should live in the house for 22 years, bring up the children singlehanded (H has them for about 6 hours a week) and then give him half the house, especially since he's earning 2-3 times what I am. (and i gave up my high flying career to look after the children, but that's another issue).

OP posts:
prepperpig · 05/05/2015 16:24

To be fair to him you want to have your cake and eat it. You want to buy him out later on down the line at today's values. That means he has lost the opportunity to invest his share of the equity at todays prices.

You should either buy him out now at todays values or later at the value at that time.

Original poster
HenriettaBarnet · 05/05/2015 16:27

sorry cross posted with you moonfacebaby. He will give me an amount for maintenance for the children from which I will cover some of the costs of bringing them up, including housing them. (although I could say that my income covers the mortgage I suppose).

I don't really want a mesher order as I don't even want to give him a third of the equity in 22 years - again I don't see why he should get it, it's my house, I'm doing all the hard work. We've both got to work for the next 22 years to support the children, so no reason why he can't start thinking about his pension now. He has been crap with money for so long and now he's trying to get a share of the house with no effort.

He'll have to stay on the mortgage as its too high for me on my own. However I understand that if i get a court order for child maintenance, then I can count that income as mine for mortgage purposes and he can come off the mortgage then?

OP posts:
noddyholder · 05/05/2015 16:31

He will have to agree to come off the mortgage I think. My friends dh fought tooth and nail to keep his share and only gave in for want of a better word when his new partner got pregnant and he just wanted a clean break hence the pension

Original poster
HenriettaBarnet · 05/05/2015 16:31

I don't, my main priority is to keep the children in their house near to their schools. We couldn't move anywhere else in the area, as rent would be as high and I couldn't afford to buy anything on my own. In fact, I couldn't afford to buy anything with H either as we got this house for a bargain price and it's in a bit of a crap state, so nothing else is as cheap.

So the only alternative is to sell up and move areas, which would involve new schools and upheaval, and no ability for me to buy anything ever jsut so he can get his 100k out of the house now.

He earns around 200k a year, and stands to inherit a fair amount, so he will have the ability to buy a place in the future if he is careful. I have no ability as I took on a lower paid job to do the childcare. I'm not going to carefully renovate this house (by hand - I'm doing it myself) and then give him a share of it.

OP posts:
prepperpig · 05/05/2015 17:08

But it is his £100k.

You're asking him to give up the chance to buy a house of his own using that equity. That's fine and he might agree but then he is also entitled to the increase in value of the property.

You will spend money on the house, sure but he will have to spend money renting in the meantime (or borrowing money form elsewhere)

My Dsis has been in this position and last week paid off XH. His money was stuck in their house for nine years. As a result his equity stake had risen dramatically and she had to give him four times what she would have given him had she been in a position to buy him out at the outset. But she wasn't and she also needed him to remain on the mortgage for a year or two and so that was the price.

prepperpig · 05/05/2015 17:12

And its £100k, not just a small equity stake of say £10k. That's an awful lot of money, even though he earns £200k.

Original poster
HenriettaBarnet · 05/05/2015 17:15

yes you're right it's his 100k, but they're also his children and he needs to house them.

But if that's the position then I'll have to deal with it I suppose - I can't buy him out at the moment so if I want to keep the house I need to live with what the financial consequences are of that

Am I right in thinking that once i get a court order in relation to the maintenance, then that counts as part of my income for mortgage purposes? I would like nothing more than to get him off my mortgage - he has such a bad credit record and is absolutely rubbish at dealing with money.

OP posts:
prepperpig · 05/05/2015 17:23

I think it varies from lender to lender. Probably worth calling a few to ask.

noddyholder · 05/05/2015 17:26

It does vary and some require a minimum time scale of having received the benefits. If you extended the term could you buy him out now? Thats fairly common too.

noddyholder · 05/05/2015 17:26

not benefits maintenance and/or child credits

babybarrister · 05/05/2015 21:53

This reply has been deleted

Message withdrawn at poster's request.

Original poster
HenriettaBarnet · 05/05/2015 22:02

oh well. I think I may speak to some lenders.

I'm going to have to look for a new job and then maybe I can borrow to pay him off.

I need an injection of cash from somewhere it seems.

So another question - say his share now is £100k and there is 200k in the house and it is worth (for sake of easy maths) £1m. What does he get in the future - is it £100k x inflation, or half of the equity or 10% of the value of the house?

OP posts:
prepperpig · 05/05/2015 22:30

Its half of the equity at the point of sale or buy out.

prepperpig · 05/05/2015 22:32

Because yes you pay the mortgage for the next five years but he has to pay rent because he can't live in his own house or get at his own money.

noddyholder · 05/05/2015 23:09

In some cases depending on type,of mortgage and interest rate etc it's better to both be paying the mortgage as if rates suddenly rise then you will be jointly responsible,for paying it.

Original poster
HenriettaBarnet · 06/05/2015 05:59

he's getting a rent free flat as part of his job at the moment. it's annoying because it completely suits him not to have any responsibility at all - he has no bills, cleaning, responsibility and I'm doing all of that AND making him money! It's his ideal world.

I won't be able to borrow any more, sadly my income has not increased during our marriage as I took a lower paid job and stepped off the career track to look after the children. I was earning more in 1998 than I'm earning now. I really wish I hadn't done that now.

OP posts:
prepperpig · 06/05/2015 07:04

Yes but unfortunately he'd have access to that rent free flat if he was still part of the marriage too.

I know it feels harsh but you need to look at this differently I think in order to prevent it from driving you mad. You are not making him money. He is the half owner of a property. His half ownership in that property is potentially making him money over time. You are also the half owner of the property. Your half ownership of the property is also potentially making you money over time. You wouldn't be the half owner of the property if he demanded his money back. So his willingness to leave his investment in that property is enabling you both to live in it and also to hopefully see the property appreciate in value.

If of course you chose to spend a lot of money on a property that you only own half of then that might not be a wise decision, in the same way that it wouldn't be wise if you owned half a property with a friend.

Can you give up your entitlement to another marital asset in return for the share in the property? Pension?

noddyholder · 06/05/2015 08:46

It is very unfair that after years of not living in or being responsible for the house he can just pick up the profit while he has lived a life of basically a single man.

prepperpig · 06/05/2015 09:21

Speak to your solicitor. Every case is different but you really can't expect him to leave the equity in the house and not see any return for it at all.

noddyholder · 06/05/2015 09:31

He currently owns 10% of the house but his children need to be housed for years so when the house sells in future he should still own 10% not 50% He does seem to be a bit cake and eat it!

prepperpig · 06/05/2015 09:59

No, he jointly owns 100 percent of the house (possibly 50 percent if they are tenants on common, more likely a shared 100 percent if they are joint tenants) and has a joint debt equivalent to 80 percent of the value of the house secured on the house so that the house can be reposessed if the OP and her H default on the loan.

The bank may or may not allow him to come off the mortgage and the OP to take over the whole debt depending on the OP's financial situation. They won't want a debt of 80 percent of the value of the house if the person liable to pay the debt (against whom they can recover) only owns 50 percent of it.

The OP might be able to change the set up so that the house is owned in different proportions i.e. the H leaves in his 10 percent equity (and therefore only gets 10 percent of any future value), she takes on all the debt over the remaining 90 percent which she then owns. This will be dependent on her being able to get a sole mortgage for the £800k though

Do speak to your solicitor again OP because all sorts of things could affect this.