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Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
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Question
Mortgage decision following marriage split
My wife and myself have been married for 10 years but have taken the decision to split. We are very much still on talking terms and we both wish to remain friends for our sakes and our two children, and deal with the separation amicably.
We own a property worth around £420,000. My wife has been supporting the children since they were born and we ensured that we could afford the mortgage payments and all other expenses through just my salary. There is £217,000 remaining on the mortgage.
My wife has no regular income and due to some past issues with debt, all now cleared, her credit rating is not great. It seems likely that she may struggle to get a mortgage offer herself especially as her only income would be child maintenance plus benefits.
I have every intention of remaining part of my children’s lives and wish to do what I can to continue to support them and my wife. One of my biggest concerns with the separation is ensuring that my children have the security of a roof over their heads.
As we continue with the separation we will sell the family home with the equity being split 50/50.
I would like advice on how I can use this equity to secure two homes, one for myself and one for my wife and children.
Can I buy two homes, live in one and can my wife and I agree that the child maintenance goes towards paying for the second mortgage and then her and the children live in that home?
Is there any advantage to buying the second house as a buy-to-let home?
Today, with the outstanding mortgage of £217,000, I am comfortably within my means and will continue to do so when paying child maintenance so it seems like a safe assumption that I could continue to afford to pay towards such a debt split across two properties.
I am aware of the additional 3% stamp duty if I buy a second home. I am unable to see that there is any way to avoid this even during separation until we are officially divorced.
Answer
In theory you can have two ‘homes’, as long as you can convince the mortgage lenders you can afford them both as you will be jointly and severally liable for the mortgage on your wife’s home as well as your own. If you have an interest in both homes, you will have to pay the higher rate of stamp duty on your proportion of the second one, regardless of whether you are divorced.
When purchasing a home for your wife and children, you could consider a joint applicant, sole proprietor mortgage which would mean that you would be jointly liable for the mortgage with your wife, but you would not own the house – the deed would be in her name only. This would mean that you would not have to pay higher rate of stamp duty because, technically, you would not be purchasing the property (just committing to pay the mortgage).
In terms of mortgage affordability, some lenders will allow state benefits to be used in the income calculation, so this should help your wife. They will also take the income from child maintenance into consideration.
I can’t see any merit in getting a buy-to-let mortgage for the property in which your wife will live, as this type of transaction will be regulated because a family member/dependant would be living there.
This means it would be assessed in the same way as a normal residential mortgage, i.e. on affordability – and buy-to-let rates are slightly higher than residential rates. And you’d have a higher stamp duty bill.
It can be quite complicated and stressful, so do get in touch if you’d like us to sort out the finances for you both.
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Question
Remortgaging with complex income
My husband and I are due to remortgage in three months’ time. We have been waiting for Brexit before we do anything to see what happens to prices, rates etc. I have two jobs – one which is on a part-time employed basis and the other which is freelance. Therefore I am a combination of employed and self-employed – my employed salary is slightly higher. Meanwhile, we also want to add some money to our remortgage to pay for a loft extension. Do you know what our best course of action is? Are there any lenders who might be able to help?
Answer
Whilst you may feel that your income is complex, you may be surprised to hear that we help borrowers with more than one income source all the time. Generally speaking, lenders will take into account all of the larger income, plus 50% of the lower figure (in your case, the freelance income) plus all of your husband’s income (assuming that he has some). There are a couple of lenders who will use all of your income from both sources. Without knowing the numbers involved, it is not possible for me to tell you how much you can actually borrow, but please do feel free to give us a call and chat this through. In terms of raising money to cover the loft conversion costs, this is perfectly fine, as long as the new total amount of mortgage you want is no more than 90% of the current value.
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Question
Help to buy? Do I need a specialist mortgage?
We are looking at purchasing our first home using the Help to Buy: Equity Loan scheme. Firstly, can we get a mortgage in the normal way or do we need to go to a specific bank or department? Secondly, what happens to our mortgage when the five-year loan comes to an end? Do we pay the loan and the interest, or just the interest? Will this mean we will have to find a mortgage which covers the loan interest? Sorry for asking so many questions – we are in the early stages of this process and trying to look at all our options before jumping in!
Answer
Most high street lenders offer mortgages through this great scheme, so you really should not need to approach a specialist provider. After five years you will have two options:
1. To remortgage and raise money to pay back the Help to Buy Equity loan; or
2. Pay (just) the interest to the Government
In our experience, after five years, most people choose to remortgage and pay back the loan if they are able, as they feel this is the most attractive option. Do get in touch if you would like us to find you the best initial deal for your requirements.
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Question
Repossession – confused about what I owe
How do I go about making a complaint about a mortgage company? I have been through quite a long and drawn-out process with them after they repossessed my house. To cut a very long story short, after taking me to court, they said there would be no further charges or money due after I had returned the keys and vacated the property
I borrowed exactly £200k from this company. I initially borrowed £178k but then borrowed a further £22k to complete a refurbishment. I put down a £28k deposit and bought the property for £205k in 2003. In 2009 the lender took me to court due to arrears – at this point the arrears were approximately four months and would have amounted to £4k arrears. I repaid, I think, £1,020 monthly repayments. The lender took the house and sold it well under market value for £203k in 2010.
I understood they had received, through this sale, the outstanding amount I owed up until the point I vacated the property, the remainder would be mine. However this appears not to be the case. I have continuously communicated with the lender but they will not speak to me on the phone. If I communicate via letter I get a response only after a long period of time when they say I owe them £28,000.
I want to know where this £28,000 is made up and how it came about. I spoke to the Financial Ombudsman which said there were £8k selling fees and further interest. They also told me a £14k redemption had been added and charged to me and that the lender has offered to refund this to me. But recently the ombudsman has backed down.
I have lost my £28k deposit, £60k repayments, £50k in refurbishing the house and I have lost my home. So I am still not sure what I am paying for and why. What do I do next? Is there someone who can help?
Answer
I am so sorry to hear that you have been through a difficult time. The Financial Ombudsman is there to address any issues such as this. If you have found them to be unhelpful or indeed unable to assist, then your next course of action would be to seek legal advice from a solicitor who specialises in this area. Good luck.
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