Financial settlement advice

[bobbafett1976]

Hi all

My partner and I of 20 years have a property we live in that is both owned by us. She also has a property owned by her outside London which is rented out.

We have split up and are amicable and we are currently living together but I would like to move on. We have both agreed we would rather not sell our current house (although it does have significant equity) and uproot the kids. There is very little equity, if any, in her other property.

I’m looking for ideas/suggestions that will enable me to walk away with something financially, doesn’t have to be half the equity. She does not earn much and so any income from the other property will go some way to helping pay the mortgage when I leave. I don’t have a pension and would like to walk away with something which I can use to invest in retirement.
Is it possible to get some sort of legal agreement for her to pay me some sort of fixed income? Do you have to been married?

Open to any other ideas, suggestions that would provide me with something? Also worth mentioning, although we are not married and our kids are 17 and 22.

You could have an agreement to sell the property when the youngest moves out and split the equity at that time?

Her paying all the mortgage on the intervening years is effectively ‘rent’ to you for having the benefit of the property.

You won’t get a fixed income agreement legally so would have to agree between yourselves and rely on good faith

yiure not married so you’d both be entitled to only the property

she owns the house that’s rented - that’s hers

you both own 50% of the joint home ( assume joint tenants ) so she owes you that

pensions would be your own if there are any ( I know you state you haven’t got one)

if she doesn’t earn much will she be able to take your name off the mortgage ? Has the lender agreed that ? Can she move into her house ?

tbh if there a lot of equity you’re probably better to sell it, each take you’re 50% and move on. You’re kids are all but grown up so can deal with upheaval

Thanks for your message, the hope was that her rental income from the other property and maybe a lodger or two would go some way to demonstrating she can afford the mortgage by herself, there are 4 of us here at the moment but 5 bedrooms so when I do move out she would effectively have 2 spare rooms. Also worth noting is a unique property with an old out house and character so we are reluctant to sell it as we think it would be a good for the kids to inherit at some point (setting aside the issues with inheritance tax).

I also wasn't aware that we could not enter into a fixed income legal agreement. The other suggestion she has put forward is that I effectively live in the other property or take control with some sort of management agreement. I can then choose to live in it rent free (obviously paying the mortgage or rent it out and taking the difference between the mortgage and any rent received which is around £1K) however I am aware that I would effectively have to pay tax on the rental income.

I think you need to cut your losses. She needs to sell the other property and buy you out or sell the current property and split the equity. Do you work? If you lost your job how would having a house that you own impact your ability to get financial support? Also if you got sick in old age how would your care be paid for? It's nice that you want to leave your kids something but I'm sure they wouldn't want you to spend your retirement years in poverty to facilitate that.

You’re not married so spousal maintenance order is not possible ( although rare on divorce as well) and can’t get a mesher order or pension sharing order

you can agree between you how to split things

but legally she owns the house currently rented which you don’t, ( that she can leave as inheritance), you each own 50% of the shared home. Thats the legal entitlement. If you want to take your name off the mortgage a lender has to agree so she’ll need to pass affordability tests to demonstrate it’s feasible

if you live in her house and pay rent you’re paying off her mortgage which she is 100% the beneficiary of, while leaving you no claim on any of that asset while she is still living in the family house which you also get no benefit from ! Ludicrous

imo you need a complete rethink and proper discussion that sees her buy your 50% out of sell and take your 50%

your children are not young. Keeping you both financially linked for years is daft

Thank you for all the helpful advice, I will have a rethink

One last thing I forgot to mention is the total equity is around £190 so quite a lot to walk away from

You’re not walking away from it though. You’re working out a fair split of it ?

Like others have said, seeing as you aren’t married, the only thing you can do is to either sell the family home and split the equity 50/50 or she buys you out by selling her other property. The children will still inherit any houses the two of you buy in the future or own and any equity you gain is moved into the new property so no one is worse off aside from the cost of buying and selling. Remember that if you move out but remain on the deeds, eventually you will become liable for Capital Gains tax for 50% of any equity in the property at the time it’s sold (she won’t be liable, if she stays in the house) so you’re better off sorting it out sooner rather than later.

When I split from XH he wanted me and the kids to be able to stay in the family home. I therefore took out an interest only mortgage (in addition to the existing repayment mortgage) to give him a deposit on a flat. I then took full responsibility for both mortgages. The deposit amounted to 30percent of the current value of the house and he retained a 20 percent interest in the property to be paid back when the younger child left further education. This was a legal charge on the property and agreed with the mortgage company. When my younger child was in university I sold up and downsized to pay my XH his 20 percent and paid the interest only mortgage off. Luckily there was significant equity in the house to do this though I did increase my mortgage so that I could buy a new home in my preferred area. It was beneficial anyway as I no longer needed the running costs of a large home.

However that was only possible as I could pass the affordability requirements of the mortgage company, and for that reason it's fairly unusual to be able to avoid selling the family home. I was lucky to have a good and rising income to be able to afford it plus all the bills and council tax.

I would very strongly advise you not to walk away from your share of the house - it's very hard to start again with nothing especially if you have no pension.

some really great advice here - thank you all

The children are 22 and 17 years old? Sell the family home and split the equity.