Charge on property

[Sweetie1980]

Hi all, currently trying to agree on finances, my stbx is difficult and wants to give me nothing basically. He knows by law that I am entitled to half the equity in the house, he is self employed but his accountant has managed to play down his earnings so it looks like he doesn't earn much. As he has mortgage capacity he wants to get a mortgage to top up and the mediator said I could take more equity and have a charge on my property, to pay him back later from selling house. my solicitor had previously advised me that I would be entitled to more equity (65/70 ) as I am primary carer and only work part time but this doesn’t seem the case . He wants 50:5O shared care for this reason I think ,.. he is abusive so it’s hard. Can anyone help ?

I don't know what a settlement would look like without a lot more detail. What I do know though is that if you're saying he is "abusive" but what do you mean by that? It can mean one of two things really.

If you mean he is abusive in such a way that it could be coercive control or domestic violence, then clearly you need to raise your concerns as shared care would not be appropriate at all and nor would ongoing financial ties. You would want to be free from this man and only receiving child maintenance via CMS so that he retained no control over you.

On the other hand - and I'm not accusing you of anything but unfortunately I see this a lot - if he is "abusive" because historically he's been the one who managed the finances or the divorce has turned nasty, he isn't agreeing to how you want the finances settled and some cross words have been spoken between you, this obviously means something very different. There's a long running thread on the SeparatedDads forum about an ex-spouse who made accusations of abuse and she ended up with a £3k settlement to clear her legal bills and nothing else. The falsely accused ex ended up with everything they wanted - shared care, no ongoing maintenance (child of spousal) and he got what assets they had left to clear his debts because of the legal bills of her false accusation.

So what I am saying is if he is "abusive" make sure that's true because otherwise things could get very messy and very expensive and it will be you rather than him who ends up paying for it.

You’re paying your solicitor for advice based on all the detail of your situation so they can help up I understand what’s possible better than anyone on here.

I just wondered if anyone has been through similar, he was abusive which is why oi filed for divorce, verbal and emotional not financial. I don't care about what he has done to me now but I won't let the kids suffer .

Are you married ?

Yes, going through divorce

You have posted a bit of a mixed scenario. It’s best to split some of the issues up.

Parenting: This should be decided on what is best for the children. If you cannot agree you will need a court order that sets it out. At 50:50 no CMS is payable. Anything else then it will be payable but if he is self employed don’t expect much. A lot of men concede 50:50 when the reality hits. If he isn’t going to pay much in CMS it might not be worth it to him when all is said and done.

You will have to substantiate concerns about welfare to stop him seeing the children. They should get a voice in it as well and will probably be interviewed by CAFCAS.

Asset Split. I will assume the house is the only asset. The split will made based on your respective housing needs. Which are usually about the same. If one of you needs more equity because of low earnings due to higher % of childcare then you get tend to get a bigger %. You would both be expected to maximise your income.

Charge on the property. I assume you want to defer paying out part or all of his share. If he wants to buy he will fight this. There is no unfairness in this as you are both entitled to want property ownership.

It’s not a favoured solution if it can be avoided. Eventually you have to pay it over to him through remortgage or a sale. That might be ok but your borrowing potential may not improve as you age. But the house value will increase inline with the market. 30% today could be £100k and £150k in 10 years. Downsizing isn’t always viable because children don’t neatly move out when 18.
There is a lot to think about if you go down this route and you need to consider the long term. Me personally, I wouldn’t want to be extending my mortgage in middle age and nobody really ever wants to or can downsize.

Thank you Lemon, this is really useful. Its hard as I don't have any money to get me On.my feet, I currently earn around £500 but I am work as a contractor so that could change or disappear at any point and i get the child benefit . The mediator suggested the charge but I need to check with my solicitor I think ( which will cost a fortune so I was waiting for an offer )

Lemon made good points
If you were awarded say 70% if the equity with his 30% being deferred could you afford to pay the mortgage ? Deferring the sale is not always on your best interests as it could leave you tears down the line with higher money to find and needing bigger mortgages later in life

How old are the dc ?
You will need to look to find full time work in reality

I hate to say this but if he’s self employed and doesn’t want to pay he may dodge cms too….. not acceptable or fair but you’ll find many threads on this site where self employed nrp get away with that!

Pensions are sometimes s bigger asset than the house........

@JadeGreen19

Pensions are sometimes s bigger asset than the house........

True but they're pretty useless at addressing "needs" in most divorces because they can't be accessed immediately. As a rule of thumb, only 70% of their face value is used to compare them against current assets like home equity or instant access savings. So if for example you have a pension worth £140k and home equity of £100k, one getting the pension and the other the house would be considered a 50/50 split.

Thank you for your replies . DC are 6 and 11. I think he will go back to his earning capacity once divorce is finalised , there is definitely a flaw in the system re self employment.

@Sweetie1980

Thank you for your replies . DC are 6 and 11. I think he will go back to his earning capacity once divorce is finalised , there is definitely a flaw in the system re self employment.

Well, CMS assessment is annual so it has nothing to do with whether the divorce is finalised or not.

Incidentally the reason he is probably demanding 50/50 is a negotiating position so that the end result doesn't go beyond a 65/35 split in your favour. Unfortunately when people are reasonable at the beginning of a divorce, that's when they tend to get a bad settlement because they leave themselves no room to negotiate.

Thank you . That’s the exact split my solicitor suggested but the mediator suggested I pay it back in 12 years as a charge on my property . This is what I am confused about .

@Sweetie1980

Thank you . That’s the exact split my solicitor suggested but the mediator suggested I pay it back in 12 years as a charge on my property . This is what I am confused about .

This usually means that instead of you buying him out now, usually by remortgaging, you defer this for 12 years. When he will be entitled to 35% of the value of the home or equity in the home.

In the meantime you pay the mortgage usually in full. There is a fairness in this as you occupy the whole home part of which he owns. But it sticks in the throat for a lot of people.

There is no automatic entitlement to this sort of arrangement. He could be ok with it or not. If not, then you would have to demonstrate that it is necessary in court. Basically that you could not buy or rent a suitable property that meets your needs. His side would probably present examples of properties that are suitable if they are available. Securing this is not a forgone conclusion. He is unlikely to want to do this and will be very resentful of not being able to get his equity out.

The downside to this is that in 12 years you will have to find the 35% of the equity. To do this you would need to remortgage or sell and downsize. The question is how will you afford it in 12 years time and will someone lend it to you?

It will be a much larger amount then if house prices grow. In the UK house prices grow faster than wages. Most people can’t afford the homes they bought 12 years ago. But it depends on where you are in the country and what sort of career trajectory you have.

Thanks Lemon. Sorry I didn’t explain very well . There is enough equity in the house to buy two small houses but to do this he would need to get a small top up mortgage and I would take a larger sharer of assets and pay back at a later date . I can’t currently get a mortgage. Thank you for your help

@Sweetie1980

Thanks Lemon. Sorry I didn’t explain very well . There is enough equity in the house to buy two small houses but to do this he would need to get a small top up mortgage and I would take a larger sharer of assets and pay back at a later date . I can’t currently get a mortgage. Thank you for your help

I don't think that sounds like a fair settlement to be honest and I think it will set you up for problems down the line. If your mortgage capacity is lower then you should get more of the equity. It can be offset with other assets (like his business if he's self employed, or pensions).

It's not in your interests to get a Mesher Order because it'll just set up problems for both of you. It'll probably result in your ex burning money on rent for years and you'll have to somehow come up with 35% of the equity or downsize at some future date. All of which prevents you getting a clean break, which I doubt a court outcome would result in if there was another way for you both to rehouse.

Also, his accountant doesn't sound very smart and my first question would be how much is his mortgage capacity relative to what he claims to earn. If it is more than 4 times salary then it's a really obvious fiddle that solicitors, judges, mediators etc would easily see right through.

Best option for you I think is to get a full account of the assets and then go for a 50/50 split if you have to but get as much of your 50% as possible in home equity whilst his 50% can be made up of his business, chattels, savings and pensions.

Thank you , this is helpful . He hasn’t been paying into a pension but does have a small one ( about 30k) this is probably because he is expecting a very vertical large inheritance in the future. He said during his time I could see the kids for an afternoon with dinner so I am going to suggest five nights in 14 as he is clearly happy with me being a babysitter .

He just seems more interested in the overnights giving the kids less stability

@Sweetie1980

He just seems more interested in the overnights giving the kids less stability

When you divorce, your children have two homes, not one. You need to forget the idea that stability is one home from now on. This is a new normal.

They do but I don’t want them house hopping all the time , I wouldn’t want to do that as an adult so why do we expect kids too . I even suggested nesting for this reason and his response was no I don’t want to move around all the time !

Thank you for your replies . Yes I would prefer a clean break , he has already commented that he wouldn’t help me . He has put us both down as employees within his limited company so with staff costs it doesn’t look like he earns much , the mediator put a dividend amount down on my income but I do not get this directly .Do you think I should go back to my solicitor with this ? I am running out of money for legal fees but I know he is constantly in touch with his solicitor .

He is now suggesting I look for houses that are 20-25 minutes walk away from the school as much cheaper , I don’t drive so I think the kids would struggle . Funny as he doesn’t walk anywhere! I would also be doing more school runs . He is saying he has no mortgage capacity and can’t get proof of this … I am almost certain he will get a mortgage or funds from his mother to get a big house near the school . Would needs like living close to school be considered ? I don’t mind walking but I do think Kids would struggle

20 min walk to school would not be deemed unreasonable I don’t think
He will need to be able to demonstrate that he has no mortgage raising capacity- eg from declined mortgage applications if some other evidence.

What he will be doing is establishing that your housing needs can be met by identifying properties that are suitable. Proximity to their school would be a critical factor in establishing this.

20-25 minutes walk sounds ok. If you would struggle look for property on a bus route.

Best not to think about what help he will get post divorce. It won’t be good for you. Focus on getting what’s best for you out of this situation.

If he has a dividend allocated to you. Tell him you want it paid to you directly. Unless it was paid into a joint account and you had access to it. Otherwise you want to receive it. Implies you also have an interest in the company. Find out what that is.

Thank you , he only put himself down as 60 percent interest on his form e, I don't have access to the money as he gives me a ‘budget ‘ each month and he never wanted me to have access to the pin number, he also put staff costs down but there is only me and him. Is there any way I could raise a mortgage against the house? The houses he has suggested are also not in the catchment area for high school ( ds in year 5)