Advice needed on what I can afford/do when buying a house post divorce

[Goose72]

I am still in the family home, which is struggling to sell, and I can’t afford to reduce the price further (it has already been reduced once). I need £125k to buy him out, although it’s not ideal
as the house is too big for me now and maintaining/heating it will cost more too (than a smaller house).

I want some advice, generally, about what I can do - either if I stay or downsize. Likelihood is, I will still need a mortgage to downsize. I don’t want to end up losing all of my disposable income as it would make me miserable and worry all the time. My NHS pension lump
sum, that I can get at 60, is around £70-£80k. I’m 52. Just want someone to give me advice on how to do this with either no mortgage at all or something that won’t cost much in monthly payments. I don’t mind using my lump sum pension to pay a mortgage off at 60.

I have no living close family (apart from
my 2 children, one at university) for advice.

Do I need an independent financial advisor or a mortgage broker?

I‘m unhappy in my stressful NHS job too so may need to leave/take a lower paid role. Hence why I don’t want to put myself in a position of financial hardship. I’ve worked too hard over the years.

How much do you earn? That will affect what you can borrow

I saw a mortgage broker about this. You can use mortgage calculators online. You need an idea of your deposit, how long a mortgage you want, and of course the price of the house you want to buy.

Advantage of downsizing is smaller bills long term, but there would be initial moving costs for you

An ifa isn’t really the right person to be honest. You might be able to find one who will charge you by the hour to help you model things out but it’s not the type of thing they are really there for and it might be expensive. As pp said, a mortgage broker can help you understand the mortgage side but otherwise I think you need a spreadsheet and to make some decisions. Can you use excel? If not do you have a friend who can help you?

£48.5k at the moment but £52.5k ish from next year

I think I’m going to have to move anyway as this house will be too big for me, especially as my eldest is not here most of the time (and he and his girlfriend are already considering moving in together after university) and the youngest has plans to go south as she wants a career in aviation. It’s a lot of housework too, as well as the up keep of the place.

Yes, can use Excel. I think what I’m looking for is advice on how I can use my pension lump sum to pay it off but keep payments lower until I get it. So, whether this means taking a longer term mortgage, I’m not sure. Hopefully, I won’t need a mortgage at all but I can’t afford to drop
the asking price on the family home anymore. Stbx has already got his pension lump sum
and father’s inheritance so he is financially in a much better position than me.

I’ve read on other posts that NatWest are pretty good on things like this.

I have a colleague who went through a divorce at my age and she rented instead of buying. She is still working at 68 and has said her entire NHS pension payments will be needed to pay her rent, for the rest of her life!! Rent is more than what a small mortgage would’ve been! I don’t want to end up like that so it’s definitely buying for me, rather than renting.

Work out how much you spend day to day - assume in the first case bills stay the same even if you downsize

Take care when downsizing to get a home that is sensible - small homes can be very inefficient

If you do think you will move to a lower paid job, estimate that salary and work out the monthly income

The difference between the first and last figure is the most you want to be paying on your mortgage

See an advisor or use an online calculator - rightmove have one - to get a feel for how much you can borrow

What is your plan for when you need a pension, if you use it now?

What are the costs for properties in your area?

What is the likely equity that you'll walk away with when the house sells?

If you know you can pay off the mortgage in 8 years, and that still leaves you with sufficient cash/pension to live off when your retire, could you look at an interest only mortgage? It would keep your monthly payments as low as possible.

You could get a mortgage with the longest term possible? Then the monthly repayments will be lower than a shorter term and you can pay it off at 60.

If the house won't sell at the price you want then what will you do?

Be mindful that if you wait for prices to rise they will rise across the board and you still won't have enough

I am not sure what you mean by "buy the ex out" - surely you sell and then split the profit between you ? Are you saying the financial settlement was made with a predetermined house price that was wrong?

I took in a lodger. I was lucky, it worked well.

It may not be a tax free lump sum from your pension in a few years time - that's a clear risk

Could you look at shared ownership then buy more of the house when you get your NHS lump sum? Although to be honest on your decent salary I would have thought you would have found somewhere to lend you enough to buy him out or buy somewhere else especially as you are only 52 and are expecting the lump sum.

What sort of equity do you have? How much extra do you think you'll need?

Is your divorce finalised? It sounds from what you say as though he might be in a significantly better position than you.

An interest only mortgage would keep monthly costs lower and allow you to pay it off with the lump sum. But you will be paying interest on the full amount all the way through - you won’t bring it down with repayments. I understand why you are wary of having high mortgage payments, but using all your tax free lump sum on this will leave you poorer in retirement too.

how much do you expect to get from the house? And how much would you need for a new property? With some numbers it would be easier to think about your options

She's 52. No-one is going to be giving her a 30 year mortgage.

Mortgages are based on affordability. If shes got a hefty deposit and a decent income now with the possibility of a decent pension then she absolutely could get a 30 year mortgage.

Aren’t maximum mortgage terms based on the retirement age? When me and my DP got a house recently we couldn’t get a maximum term because he was 45 and so they gave us 22 years (from memory). We had loads of headroom on affordability but his age precluded us from getting a longer term.

You'd be surprised. This happens more often than you would think. They do appreciate affordability issues especially if there is hefty equity. It is minimal risk as people will often sell up later to downsize, live with kids or go into residential care.

Definitely find a decent mortgage broker

Mortgage broker.

Sorry you are going through this, stressful times, divorce, house sale, transition to emptier nest.

Once house sale and divorce / separation are finalised and those stresses minimised you might find your job is more manageable. Can’t beat an NHS pension! So I would stick with your job and income until you are stable in a new house and know how your expenses and financial future etc will play out.

What is your house worth?
What's the outstanding mortgage?
How much would a suitable property cost?
How much do you need to give your STBEXH? Would this be lower if the house sells for less?
Do you have any other assets or savings?
How much disposable income do you have each month?

Ideally you won't use all your pension lump sum to pay off a mortgage because you will then have reduced funds for retirement.