Advice: how do I afford to give H the equity in the house?!

[runningmom]

Quickly:
Amicable split this week after 20 years marriage and 2 kids.
House worth £300k and about £200k in equity which my H will want half of at some point do he can start again with his life.
How on earth do I release 100k from the house as I’d then have a 200k mortgage which I wouldn’t be able to afford. I earn about 40k a year; my H less.
Am I better off selling so we both release equity and trying to rehome me and kids in something cheaper?
This is all new to me and I can’t afford to pay solicitors/mortgage brokers straight away. I’m coping ok; until I think how the hell I'm going to cope on one income when we struggled on two 😞
Any advice welcome.

That way madness lies. My dodgy mortgage advisor tried to base my borrowing power on my police overtime. He had no answer for how I would then pay a massive mortgage if I broke my leg / injuries on duty / insufficient overtime available and I was therefore unable to do overtime for months.

If you think you can afford the repayments by yourself, is there anyone who could
come on the mortgage with you? That isn’t a straightforward option either but it is what a friend of mine did, her mother came on the mortgage too as she had paid hers off. It does have capital gains tax implications though.

@gogogoji suggesting the OP seeks legal advice is sensible. She not only has to think of herself but of her child who she will be caring for the majority of the time. It's not "wolf" or "malicious" to point out encouraging OP not to seek legal advice is probably done for a reason. He knows she will likely be awarded a little more than half of the equity. If OP is the main carer that would be fair.

That’s why I said if you can afford it on your normal wage (without overtime). Obviously would have to think about sick pay etc. how much you are entitled too.

I think he’d like to rent somewhere for himself but stop paying the mortgage whilst retaining his equity in it (obviously only up til the point of stopping paying)

No that’s not how it works, he gets to retain his full percentage of equity even after he stops paying. So he gets 50% of the final sale price, not just of the value at the time he stops paying.

While you are in the house, he is letting you have use of his asset (his 50%) while he rents (dead money). Basically you need to pay him rent for use of his 50% which is why you pay 100% of mortgage so:

50% your mortgage payment + 50% rent to him (which goes to cover his half of the mortgage) = 100% of the mortgage payment made by you.

If you want him to keep his capital invested in order to house yourself & allow your investment to grow then he needs to benefit also.

Just wanted to say I moved out of a beautiful big family home into a house half the size which needs work. Myself and the kids are so happy here. Children are amazing and so resilient. To those who say stay and be unhappy for the sake of the children - I genuinely do not believe that a big, nice house is what makes children genuinely happy. You can make a wonderful, cosy home and they won’t necessarily even notice or care that it’s small.

It's messy as he would also be required to get involved in payments for upkeep of property in that situation.

No he would not be

Ok,the panic is normal I think as the financial realities set in. No matter which way you look at it, in most average income marriages, you will both end up substantially worse off sadly.

pas people have said look at all assets. Pension is a biggy, and if yours is bigger you may be asked to do pension sharing, so pushing for more on house may backfire.

first, have you checked “fair settlement” rules on divorce and how they work to ensure you understand impact in your divorce. Go to link above on board to ADVICE NOW and their guides . There’s also one on completing form E/D81 so you can see exactly how to complete to include everything.

secondly, think seriously about the likely outcome based on fair settlement, if you go to solicitor and “fight it “ you may well end up with nothing significantly more but will have spent months and thousands fighting it. Some solicitors are more than happy to offer you what you want to hear and let you piss thousand of pounds down the drain. In some cases it is better to understand fair settlement for yourself, go through the process of painfully accepting that and being able to visualise what your new “poorer” life will be, and then do it all through consent orders with minimal solicitor involvement. Not saying if there’s financial control, lying, obstruction or arguments don’t use a solicitor, but it is better to really get yourself to a point where you are ready emotionally to accept your new financial situation and you’ve informed yourself about what that’s most likely to be.

sounds like keeping the home is a stretch sadly, that’s hard to take in. You’ll be going through a type of grief process where your future plans have b en lost, and it will take a while to emotionally process the new reality and be able to plan positively for that.

ADVICE NOW is a great resource, use it.

Thank you for this. The issue is I can’t afford to pay much more mortgage wise a month (about £800) but buying somewhere new and using my equity as deposit I’ll still need a mortgage for about 100k which is 800ish-900 a month (so same as now) but downside is the area would be a lot rougher/kids further from school but I guess it would be mine and a fresh start. I’m not sure ; but I’ve booked appointment with our mortgage provider to discuss all options

Thanks. It all makes sense. Just overwhelming.

Are you sure about your figures? My mortgage is for £170k and I pay around £900 per month (arranged recently so not on a stupidly low interest rate either)

Well until I see the mortgage people I’m not entirely sure but I know that the 100k left on the mortgage is about £800 a month (fixed rate). So I’d imagine it would be double that to borrow another £100 (to pay ex the equity) which I wouldn’t afford (unless was interest only??)
If I sell and use my equity as a deposit, I would need to still borrow about £140k fir decent ish house (obviously smaller etc). Lots to muse on and clearly kids and stability come first but part of me wonders if selling up is mean or fresh start for kids?? Like I say, all very early on.

I was really hoping Stbxh would go for this, but he's more worried about downsizing then about the effect on his pension. So me and the DC will be downsizing more than I'd hoped. I don't think he's really gotten it yet that he won't be able to afford the type of house he wants either. Hoping things don't get too nasty when reality hits.

OP I saw a lawyer for an initial appointment, 90 minutes, and I got a pretty good idea of what was reasonable and likely to get stamped by the judge. I don't know if UK has similar process with family law court, but just wanted to say I think it can be worthwhile even if you can only afford an hour or two. If you do go, go with everything prepared, list of assets and debts, incomes now, idea of pension balances, time line of the relationship including mat leave, when big purchases were made, all those sort of things.

If you get on okay why dont you agree to remortgage up to what you can afford... then take on extra work like tutoring? And agree to pay out remainder with agreed interest (boe rates or something) in 5 years when youngest is 18

Tbh my dh and i dont plan to pay off our mortgage of on our family home. We intend to downsize in approx 20 years. I also read on here about people who bought family homes (amazing ones) as interest only and the equity gains more than offset the interest payments. Their kept the houses to raise their kids then downsized. It gave me a whole new perspective on housing

I don't think he's really gotten it yet that he won't be able to afford the type of house he wants either. Hoping things don't get too nasty when reality hits.

I sincerely hope you end up with what you want. They all seem to start out wanting to be 'reasonable', but when you start to make 'unreasonable demands' and stick to your guns for what is fair they all seem to turn nasty.

Funny you mention houses. Cousin's house is a typical US 3+2 ranch built in the late 60s. He always wanted to 'upgrade' but she didn't want the debt that went with it. Maybe that made it 'easier' for him to agree to the house/pension sign off in the end, although there was a bit of a 'go round' about it.

He went on to marry OW and they bought a big house with a pool, meanwhile Cuz made their house wholly 'hers' and has been happy as a clam.

It's now a few decades later and she managed to pay her mortgage off early and retired in her late 50s. He and OW went self employed, the business is 'not as robust' as it once was and they're stuck with a huge mortgage. They'll probably be working well into their 70s.

I've split up 18 months ago. He's renting and I'm in the family home, and have DD 75% of the time. He pays half the mortgage and I pay half his rent, and this will carry on until house is sold. That way nobody is missing out, and he will retain 50% of the equity. We are in the process of drafting a consent order for a clean break and that can be done even though we still own a house as it has "future arrangements" determined - eg house to be sold by xxx, all sale costs split 50/50, mortgage to be paid off, equity to be shared 50/50. It's not sustainable forever but it works for us in the medium term.

One thing to be aware of is that 6 years will pass quickly and you may well find that some/all of your children will have moved out/ be at Uni and only home for holidays, so the space requirements will change. Look for a new place that works well for you in the long term, even if it’s a bit of a squeeze in the short term. That might mean a flat in a nicer area, rather than a house in a rougher area. Don’t pay the moving costs/stamp duty etc twice if you can help it. Good luck

This is more bad advice. We have already established that op is the higher earner and with a teacher pension likely has by far the highest pension. It’s unlikely she would be awarded more than 50% of the house without giving up some of her pension

You're a teacher @runningmom could you sell up and move away from the area. ? Some areas are cheaper but still nice.