dh financially irresponsible

[redbushleaves]

We have been married for over 28 years, are not particularly well off but do manage to make ends meet. dh has always been inclined to take loans and then struggles to repay them.

We have a joint interest only mortgage which is coming to the end of term. We also have two buy to let interest only mortgages which are also coming to their end of term. I wish to sell these properties and get a small house with the equity released, as we have no funds to repay the loans outright.

Unfortunately, dh wants to extend all 3 mortgages for another 15 years. I feel this is financially risky, especially at our age (we are both 55+). We keep arguing about this, and this has led to increased tension in our relationship which has always been shaky - we have had separate bedrooms for years.

With my dd about to leave for university I am thinking that separation may be the best option.

But you don't even mention if the 2 but to lets are making you a profit regardless of the equity?

I'm with disquieted - your husband's choices have contributed to you sitting on over half a million pounds. I am at the increased mortgage to pay off business debt... but that's worked out in the rising market, hasn't it? Better than downsizing and moving out of London to pay off the debt, for example.

You've got £200K plus probably profit from 2 rentals that you wouldn't have without a risk taker.

I think the issues are more that you have totally different approaches to risk, and that you actually don't like each other - more than "irresponsibilty".

Do you have other assets and how secure are they? Have you built up a pension for example?

I think you should divorce and make your own investment decisions with your share.

Under the current rules, you won't get a mortgage on an interest-only basis without a firm repayment vehicle in place. The rules have changed so relying on selling the property to pay back the loan is no longer allowed -google "MCOB 11.6.5" and show him that!

Yes - I had to confirm to my bank recently that I had a repayment vehicle in place for our interest only mortgage (it's another property that we own outright). You actually don't have a repayment vehicle in place for any of these properties, do you?

If I was you I’d sell them all and split the money now. You’ll end up penniless and miserable in your 70s with his track record.

Is her repayment vechicle not the properties ? If she has a 100k mortgage on a 300k flat then won’t the bank happily extend the loan knowing she can sell the flat for 300k and pay of the mortgage? And if the rent pays the interest mortgage +profit then they have it covered even if they retire.

No, we don't have any repayment vehicle in place.

I googled "MCOB 11.6.5" to learn more about the rules - they seem a bit contradictory tbh - at some places stating that the potential equity will not be allowed as a repayment vehicle, while others such as this stating that it will:
"In complying with MCOB 11.6.41R (1), where a customer's repayment strategy is the sale of the property which is the subject of the regulated mortgage contract, a mortgage lender may wish to consider, as part of its assessment of that repayment strategy, factors such as the equity in the property when considered in relation to the level of property prices in the relevant area at the time of the consideration or, for a lifetime mortgage, the borrower’s life expectancy"

The buy-to-lets are profitable at the moment, but this could change due to new interest only tax rules.

I don't read that as contradictory.
One bit is about potential equity, the rest is scout actual equity at the time of the remortgage.

So if you want a remortgage because the house might be worth 2x more in 10 years: no.
If you want it based on the fact you already have though equity to cover the loan and then some: maybe.

Life expectancy could be an issue as you're both over 55. Although if you have pension income some lenders will look at that.

How profitable are the BTLs? Have you properly assessed the impact of changing rules? If you don't have the income from the BTLs, do you need?

What are your pensions like?

Thanks for clarifying Ellisandra. One BTL worth £320K currently has a mortgage of £200K. The other has far less equity. So in theory the first one could be remortgaged?

I would have a small work pension. I returned to paid employment only two years ago after 15 years as a sahm. Dh would have a state pension only - another reason he wants to keep the BTLs. He does however have another service business which he plans to keep going until after retirement age.

I thought you were going to say you'd been a long term SAHP - because you've been over ridden on financial decisions in the past and from anecdotal reading on here, I think that happens more often when one person is the majority earner.

I still think that without more detail, it's not fair to call him irresponsible - he takes more risks and actually, that has paid off if you now have two profit generating BTLs, plus equity in those, plus he has a business that will provide an income in retirement. I'm a bit at them all being IO at 55+ though - not great planning, potentially!

Anyway, people's attitudes to risk change over time - especially as they get closer to retirement.

A bit of a leap of my imagination here, but I wonder if having been in paid work the last 2 years, you've started to find your voice? As I said before, you obviously don't like him.

Honestly, I'd divorce him, take my share and invest it the way I wanted to. It would be more complicated if you loved him but had different risk profiles.

My instinct is to always hang on to property if at all possible.

If you have 15 years plus before you retire then there is a very good chance that the value of all three will have increased. Even allowing for a drop at some point I would be pretty confident that they would all be worth more at the end of that time.

I can see your husband's reason for wanting to re-mortgage, especially as rates are so low, even with the latest base rate rise.

Op, you are probably old enough(as I am!) to remember the time when interest rates were 15%!

Just to add another angle into the mix but I’ve noticed that both me and my siblings (and friends) have started seeing niggly health problems now we’re all over 50 and we’re all considered to be in good shape for our age. I’d start to look at making sure your debts are manageable if ill-health rears its ugly head. I know we all feel immortal but...

Beentherelefthimgotthetshirt - yes at our age niggly health problems do need to be kept in mind and is one of the reasons I am reluctant to take on home mortgage debts.

SusannahL - yes I remember 15% interest rates, it made our repayment mortgage unaffordable and ironically forced us into interest only.

Ellisandra - yes I have been finally finding my voice recently. Dh and I are poles apart when it comes to risk taking. As he is on balance a fairly successful businessman, the term financial risk taker rather than financially irresponsible might be more appropriate.

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