Supporting 2 mortgages

[atr79gb]

I'm currently going through a divorce and had my first mediation session yesterday.

One of the challenges we have is that I currently provide for my wife 100% (she doesn't work). We have around £240K equity in the house and 2 children, aged 5 and 8.

There is around £170K left to pay on the mortgage. My wife had a low paid job when she worked before and she readily admits that there is no way she could take on the current mortgage.

So, it looks like this comes to a choice between selling the house and me paying for the mortgage whilst not living there. We're planning on a 50/50 custody split so we need to be able to support 2 homes.

My mediator has asked me to contact a mortgage broker to see if it's feasible to take on 2 mortgages. I earn £75k a year. I understand as well as taking on the additional mortgage payments, I would be liable for capital gains tax.

It sounds like this would not be feasible financially but I would rather investigate the situation fully. I'm planning on contacting some mortgage brokers over the next few days.

Has anyone found themselves in a similar situation?

My OH’s now EW didn’t work (refused to) and wanted to stay on the marital home & her ex pay for it (while of course he had to house himself).

This was thrown out of court.

Your EW needs to start working & support herself. If she stays n the house she pays for it and needs to prove to the court that she can afford it. You aren’t obliged to pay for 2 mortgages (when she eventually moves a new man in will you be happy to pay then)?

The children are at school - she’ll be expected to work.

Get yourself a solicitor and some legal advice.

And you also need ‘appropriate accommodation’ to house the children.

I think downsizing is the smarter option.

My DP's ex wanted him to do this (because she refuses to work). His solicitor told him that he definitely did not need to buy her a house. And strongly suggested that it was a dreadful idea. Do you really want to be paying your ExW's mortgage 20+ years after you're divorced?

A more reasonable proposal would be to sell the house and both downsize. You need to house the children too. She will get a greater proportion of the marital assets to reflect her needs (in relation to earning capacity). However, one or both of you may have to rent if the equity is not sufficient to buy a house individually (with or without a mortgage). It's about being able to house the children appropriately - neither of you will be able to maintain the same lifestyle.

Your STBEW needs to claim universal credit (including child benefit). And she'll need to get a job in the 50% of the time she doesn't have the children (they're both at school too). That's the reality of life as a single parent.

Firstly she needs to get a job. Theres no reason she can't start at low paid and train for something that will provide her with an income.

What are house prices like in your area? Can you give her a slightly higher percentage of the equity to get a small house? I'm not sure if the sex of your DC's but perhaps just a 2 bedroomed place is needed.

I would get a very assertive solicitor and get this dealt with and sorted soon otherwise before you know it you'll be five years down the line, she won't be working and you'll be no further forward.

Theres a responsibility for both of you to provide for your DC's...not just you.

As others have stated the key is whether your ex be over housed, Ie will she have more bedrooms than required for her and the children if she stays in the current marital home?

You wouldn't be able to get a mortgage on another house and pay the current mortgage on your earnings, so not really sure why the mediator has even bothered suggesting it

If it's possible to rehouse her in suitable accommodation

Thanks for the replies.

Currently, my wife is refusing to work and is expecting me to continue to pay the mortgage. I understand from speaking to solicitors and mediators that this is not realistic - she will be expected to work.

I have had some quotes from mortgage brokers and it simply isn't feasible financially to take on 2 mortgages.

We would both need 3 bedroom places as we have a boy and a girl. In this area, that would cost at least £225-£250K which is most of the equity. My thoughts are that with a larger chunk of the equity (the total equity is around £240K) and a small mortgage, she would be able to afford a place of her own. Alternatively, she could use her chunk of the equity to rent somewhere.

Do my assumptions sound reasonable?

Would depend on what other assets and liabilities you have between you., e.g. savings, pensions, debts etc.

She would get the majority of the equity in a court, but you'd have to get legal advice for likely proportions. Avoid court if you can as it's very expensive, not least because it sounds like you are in agreement about child arrangements.

Depending on your pensions and savings etc, it may be that a clean break settlement could give her £225k of the equity (enough to buy a suitable house, if nothing fancy) and you get the remaining equity plus your pension. You can raise a mortgage with a smallish deposit and afford that. That way you could both be adequately housed.

Your ex will just have to accept that she needs to claim universal credit and get a job though. Because she needs to pay her own bills etc.

She should do this now. Stop giving her money or paying for anything for her. You can live separately even in the same house.

Why is the mediator suggesting that you take out two mortgages? Should you not both take legal advice and then go to mediation? Had your wife actually taken any legal advice?

I am not a lawyer and I am in Scotland where there would be a 50/50 split. I guess the point I would make is that you have presumably been able to earn your salary and buy the house you have and build up equity because your wife has been looking after the children. Her career prospects will have been harmed by this, as well as presumably her ability to build up a pension. So any settlement needs to take this into account. Where I am the 50/50 would include pension value.

So yes, I agree that your wife will need to find employment of some kind but at the same time, she is doing so after a career gap which has allowed you to continue your career. So that does need to be taken into account and I think proposing a larger share of the equity is fair - but only if you have also considered your pension as well in her settlement.

For what it is worth, I kept my own house and income whilst having DC. I think it would have been almost impossible to enter my profession after a gap of many years, so your wife’s earning potential is compromised and yours is not. It is going to benefit your DC if you are as fair as possible (which I think you recognise).

PS Bringing up children is work

Bringing up children is work. But a 5 and 8 year old are at school, and with a 50-50 residency split, there is no reason why the OP's ex should not expect to try to re-establish her career. A large share of the equity to providing adequate housing will help her to do this and support her children in the future.

@Arella - thanks for you comments.

The mediator didn't suggest that I necessarily take out 2 mortgages. She merely asked me to get a quote from a mortgage broker and determine if it's financially feasible so the idea can be either discounted or progressed. Supporting 2 mortgages would cost me well over half of my current income so it's clearly not feasible.

I understand your concerns about my wife's earning capacity. I work from home around 50% of the week and work flexibly to enable me to support the children 50% of the time. My wife has the opportunity to go back to work but has so far chosen not to.

I understand that due to the disparity of incomes a clean break that is more than 50/50 in her favour is a strong possibility.

At the end of the day, I simply want an agreement that is fair to both parties.

No help to your question whatsoever but it blows my mind that we're almost a fifth of the way through the 21st century and women refuse to go to work to pay for themselves.

Where's her pension going to come from let alone day to day living expenses from now on in?

I don’t think you should support two mortgages because then there is the question of who the house belongs to, but that is just my view (even if it was affordable for you). A clear division sounds better.

I hope you find a solution that works for everyone and it sounds like that is what you are trying to do. I think re-establishing a career is easier to say than do, though, so maybe ways of doing this is something the mediator needs to broach rather than suggesting you take out two mortgages.

Anyway, I am sorry that your marriage has broken down and I wish you well in sorting things out. Try to avoid court is the best piece of advice here.

@Arella - thanks. I'm hoping we can avoid going to court as currently we are able to discuss the situation rationally - we should be able to come to an agreement through mediation.

I agree that taking on two mortgages is not a good idea. What happens if I lose my job or fall ill and can't work? I would then be liable for both mortgages.

We spoke to our mortgage provider. They have offered a couple of solutions and are willing to let me switch the main house into my name with him on the mortgage as guarantor, he's agreed spousal maintenance until the mortgage is paid off and then the house is mine. I work pt (close to full time) but low pay because of on dc's sn meant I was let go multiple times. But it's up to your lender. The condition our lender has imposed is he uses them for his mortgage too

Thanks for all the replies.

@stucknoue - I haven't looked into the guarantor mortgages. I guess that may be an option as my wife has a low salary (when she eventually starts working) in comparison to mine. Does that affect your ex's earning capacity?

I've had some quotes from mortgages brokers. If I had 2 mortgages, I would be able to borrow up to £250K which, with a small deposit would just be enough to get a 2/3 bedroom place.

This seems like a massive commitment on my side and I would obviously need to put some restrictions on this - i.e the house gets sold when the kids are 18 or if a new partner moves in.

Is it fair to offer to pay the mortgage in full in place of maintenance? The mortgage in full would be around 1.5 times the minimum maintenance payment. Would it also be fair to transfer the house to my sole name and freeze her equity after the divorce? I would be the only one paying into the mortgage after the divorce (as I am currently).

If the guarantor mortgage and paying 2 mortgages are not feasible, I would look into selling the property.

I'll get some advice from my solicitor but wanted to look at all options before I meet with the mediator again.

If I'm being short sighted in my suggestions above, please let me know!

Acting as a guarantor on a mortgage will have the same effect on your ability to get your own mortgage as getting a mortgage for/with her. Any bank will treat it as a debt you have (because you could potentially end up paying it).

I wouldn't bother with anything complicated around paying your ex's mortgage etc. It would almost certainly be better to offer her more than a 50-50 split of assets and have no ongoing maintenance for you ex. And I mean that for both of you - your ex will not be dependent on you and can make her own financial plans based on her settlement and earning capacity.

It sounds like you could probably have a settlement that gives her a sufficient equity share from
selling the house to buy a (probably not fancy but entirely suitable) house at the lower end of the price range in your area. That's a pretty good deal for her and ensures the kids will be housed adequately. You can afford to house your children from your income, either by renting or a small deposit from the equity and a mortgage. What happens in relation to the rest of the assets (pension, savings, cars, etc) will depend on how much there is really.

You've agreed shared care of the children, which gives your ex the ability to work without worrying about childcare in the time the children are with you. She has no right to expect not to have to work going forward. In the mean time she can claim universal credit and access support to help her get a job. If she's low paid, she'll still be entitled to state support to top up what she can earn as she rebuilds a career.

Divorce changes people's lives fundamentally and it's ridiculous for you ex to expect to continue not to work in perpetuity.

I am not sure why you would want to do this, to be honest, nor am I sure why your STBXW would want to accept it - she would be better with a settlement from the equity which allows her to get her own place which is hers and which she will be able to retire into. Would you really be prepared to see her homeless when your children are 18 or want to get involved with her affairs if she has a new partner?

I can see you are coming at this with good intentions, but a fair settlement from the equity and a share of your pension accrued during the marriage will give her a better chance of getting on her own two feet and living independently of you - that is what divorce is about. Once you are divorced, you are not responsible for her financially otherwise why exactly are you getting divorced? There is so much potential for you to end up thinking why is she doing x, y or z when I am paying for the house - and really you want to both move on.

I mean this seriously, but are you sure you want to get divorced? Because the finality of it is real, you cannot kind of postpone that finality with guaranteed mortgages or whatever, you are two separate entities.

Don’t agree to any settlement which involves ‘ in lieu of child maintenance’ as after 12 months she can make a claim
Via cms regardless

Sell the house, split the equity, your wife needs to get a job

Wouldn't it be easier just to go and have some counselling and stay together.
I feel so sorry for those poor kids being shuttled between homes all the time and never having a stable base.

Thing is, we don’t know when OP’s wife stopped working - there are two DC three years apart so that is a long time of full-time nursery fees with some overlap. So it would be quite straightforward and like many women to stop work to save those costs/because they wanted one parent at home/because DC did not do well in childcare. We also don’t know when OP started working flexibly half the time at home. We don’t know what her job was and how easy it is to get back into. We don’t know any of these details to actually make a comment on her giving up work on a household income of 75k a year (I am sure many couples with a SAHP get by on less) - and to be clear, I am not sure we need to know to comment on the two mortgages suggestion (so please do not feel you need to fill in these gaps OP)

@Arella - thanks for your comments.

In answer to your question, I do want to get divorced but I'm just trying to do this in a way that is as least damaging to my children as possible. There is absolutely no intention of getting back together.

It might not be that apparent from my post, but my wife has really buried her head in the sand about the whole divorce. She doesn't work or drive and has no savings or plan for the future. She just hasn't considered things like how to fund the children going to university or where her pension will come from in the future.

I feel right now the only way to provide for the children is for me to fill the void financially. As my wife has not really taken responsibility for her own financial situation, I would rather make a big compromise than see my children suffer.

I think if I did fund her mortgage, the likelihood is that when the kids turn 18, she would not be working and it would then be very difficult to see her become homeless.

It's a very difficult situation! I feel the best thing to do would be to sell the home and offer her an equity share that is greater than 50/50. I would also be willing to pay considerably more than the minimum child maintenance to ensure the kids have what they need.