Planning to leave, worried coping financially.

[Kitkat1973]

Hi,

Dh and I have a dd13 and ds12, I am getting very close to the conclusion that separating from dh is the best way forward for all of us (I have posted previously about ongoing issues). My main worry is how the children will cope with the upheaval and then a very close second is coping financially long term as although I work but am not a high earner (love my job though!) We would have to sell the house and although there is quite a bit of equity it wouldn’t allow me to buy a place big enough for the three of us, (not even a two bed flat with me on sofa bed in living room), I have looked at a mortgage calculator and still wouldn’t be able to afford anything so I think I’d be looking at rented accommodation with my wage topped up monthly by the equity from the house. Does anyone else have experience of managing this way? I would probably have enough money to keep us going for around 5 years but then the worry is how I would pay rent going forwards, I am just very scared about the whole situation and need a hand hold, thanks so much for taking the time to read x

My subject should have said ‘worried about coping financially’. Sorry I’m posting while doing lots of other things at the same time so rushing!

Can you look at shared ownership?

Can you look at buying a 1bed rental property and then topping up your wages with the income to rent a 3 bed place separately? that way you'll have a property to move into long-term and have kept your equity?

Thanks for replying Tokyo! I have looked at shared ownership but there aren’t any local to me so it would mean moving out of area, I’m desperate to keep the kids in their school if possible. Your other suggestion is definitely food for thought thanks so much x

You're welcome!

Look at it as the long term investment/retirement plan that enables you to rent to cover the interim period.

I'd get onto Rightmove and find out how much 1 bed flats rent for in your area, then research that property and how much it sold for. Then you can determine if you have enough to buy outright (best option) and what your rental budget would be.

Think of it as an ark, if times ever get really rough then kids sleep in 1 bed (with curtain down the middle) and you go on the sofa. This would give you breathing space to recover/plan. Once you have a fall back position you can then plan more confidently.

Also when you're planning for retirement you know the ark is there and where you are going to live long term. It will always enable you to maintain your independence, especially if you get into a new relationship.

I got straight onto Rightmove after I read your post! If it’s financially viable then it’s definitely a more sensible option compared to what I was originally planning, I will get some financial advice, thanks again x

Have you calculated how much income you will have each month with CSA and a reduction in council tax, bills and food. Are you planning a 50.50 split or is he prepared to give you more because the dc will be living with you. Would you qualify for a housing association property. Can you move just a bit further out.

Thanks for replying Fleas. I have worked the equity out on a 60:40 split in my favour plus a rough idea of child maintenance. I assumed I wouldn’t qualify for housing association so I haven’t looked into that, I’ll make some enquiries. To move to a cheaper area would mean over an hour each way on a bus for the kids so although I’m not ruling it out it would be a last resort. Thanks so much for your suggestions!

Not wanting to rain on the parade of buying a small flat to rent out, but it isn't that simple. You'll need to pay tax on the income from the rental, as well as covering all the expenses of maintaining it and fixing any issues immediately. Plus management fees. Then if you ever sell it it will be liable for capital gains tax.

I have a family member who did something very similar in order to stay on the property ladder, and all the costs involved wiped out any financial benefit.

Another option, though maybe not one you'd consider, is to go for a 3 or 4 bed and get a lodger to help cover the mortgage If a 3 bed then you and your dd share the biggest bedroom, lodger in second bedroom and your ds the third.

cheese absolutely there are fees which need to be deducted but if she can buy with no mortgage then she can get at least some income. I would shop around on letting agent management fees as they can vary.

Also if she is resident in the property when she's ready to downsize and lives there for a number of years and it's her main residence then she doesn't pay CG tax.

I've been a landlord for a long time so don't get put off by the admin, maintenance etc is perfectly manageable. Realistically you'll only need to run it as a rental for 10 years max so look for a property that has newish boiler with warranty and take out insurance for plumbing etc.

I think you need to have a look at the rules around claiming housing benefit and having a property you don't live in. Someone with better knowledge of how it works may be able to tell you if it's technically possible - if you are renting and fall on hard times, will you be able to claim housing benefit? The other thing to consider is the income you will get from a rental as this will be considered income for benefit purposes (after tax, I assume). You may find you are no better off and have property management hanging round your neck as well. The what if's...are also worth considering. What if you have a tenant who doesn't pay rent and won't leave, for example?

You should also consider your husband's job - is he PAYE? If he is, does he work for family or someone he would consider a friend? Or in a field where contracting is common? It is always possible that he could make himself self-employed and maintenance becomes near-impossible to obtain when that happens.

Thanks for replying Cheese. I was actually a landlord 20 years ago for 3 years so I understand some of what’s involved although I’m sure there is a lot more to take into account now! I must admit that on paper it sounds like a great idea but in reality I think that the extra responsibilities may be too much on top of dealing with the fall out of a separation and possibly very stressed children (I really hope that this isn’t the case but I have to accept it is a possibility 😞) thanks for your thoughts x

Thanks for your input Porcupine. If I was single then a lodger is something I would consider but with children I wouldn’t, they are alone before and after school for an hour (I work 5 mins away so can get to them if necessary) so wouldn’t feel comfortable x

Thanks Getaway, my husband is PAYE without the option of going self employed so think things would be ok in that area, fingers crossed!

I’m really grateful for the replies, this is not something that I’ve talked to anyone about irl X

What are your options for improving your income separate from CMS?

You don’t need to stay in the job, even if you love it. Needs must and all that. Are you full time ? Living off capital should be avoided. You need to up your income.

You thinking that you would have 50-50 custody? If not and if you were thinking that you would have the children most of the time, then I think you should have the right to live in the house for the next five years.

Sorry, were you thinking...

Thanks for replying Lemon and Hollow.

I work full time during term time so I have thought about looking for another job or possibly trying to pick up something more casual (cleaning maybe) during the holidays.

I will have the children most of the time but I can see a shit storm brewing (partly him but also an extremely nasty member of his family will get involved) if I suggest keeping the house and asking him to leave! I just want to keep things as amicable as possible for the kids. We certainly won’t be destitute if we move into rented I was just worrying about the long term which will ultimately just affect me x

You haven't mentioned pensions at all. What are each of your pensions like?
If he has a final salary pension you may well be able to negotiate a bigger share of the equity in the house in exchange for not touching the pension.

Hi Ohhgreat, we both have pensions but I’ll have to check paperwork to find out further info. I’m going to book a consultation with a family lawyer once I’ve got all the info I need together, thanks for replying x

What about universal credit? Have you looked at a benefits calculator?

Also if you have a decent deposit a mortgage broker can find lenders who will take into account, salary, benefits and non court ordered child maintenance so you might be able to buy somewhere after all

Plaidmaid I would have quite a bit of money from the sale of the house so pretty sure I wouldn’t qualify, thanks for suggesting though x

MissSmiley I am going to contact a mortgage broker to discuss this, it would mean a mortgage until I’m about 125 but would be the better option if possible 😁 thanks for your thoughts x

That should have been a very smiley face rather than a grimace lol