Htydjtk

My wife and I bought a property just over 2 years ago for €114,000.

We put down a 10% deposit (€11,400) and so took out a mortgage of €102,600.

We took the mortgage on a short term (15 years) to pay off capital as quickly as possible. The mortgage balance is now down to €89,000.

So, based on the price for which we purchased the property, we have around €25,000 of equity available should we sell at the same price.

We have recently separated (in November). At the time, we had had the property on the market for a couple of months. We have left the property on the market since and still have yet to have a single viewing.

My wife has been contributing to the mortgage since we separated, even though she doesn't live there. This is so that she can receive an equal share when the house sells (it was 5 year fixed rate). She is now telling me that she cannot afford to continue doing this. She has asked that I 'buy her out', by giving her half of the equity (around 12,500) and in return, she will sign over her half to me.

My issue(s) with this:

• I have around 20k in the bank. This will drastically reduce that to less than 8.


• What if the house sells for less than we paid? It's not looking promising right now.


• What if the house takes years to sell? I will not be able to access that capital, meanwhile I'm paying twice as much each month towards the mortgage. (And stuck living in a location I don't want to be in anymore).

What are my options in this situation? I'm looking for something that will not put me in financial difficulty, whilst still being fair to and helping my ex-wife, whom I still care for.

Depending upon the divorce laws in your jurisdiction she could be entitle to 50% of the proceeds of the property sale no matter if she contributes to the payment or not. In some sense she may be doing you a big favor by contributing half. You may want to seek a lawyer's advice on all this because it is so jurisdiction dependent.

Typically there are closing costs when selling a property. Here in the US, even if you got the asking price, the property would yield about €7-10K. So each party would be entitled to between €3.5-5K. If applicable closing costs need to be factored into the transaction. I am having difficulty finding this information that is UK related for the seller.

Whatever you can do, it behooves you to work with your estranged spouse. Will she take a bit less than what she is owed? Even if it partially depletes your savings, it might be worth it. If she takes you to court to force the sale, those costs can wipe out your savings and yield nothing. By buying her out, you at least have a property on the asset sheet, where paying a lawyer is nothing but an expense.

Anecdote: My grandparents gifted me and my girlfriend £30k so that we
could buy our first house together, and I contributed a further £3k
towards the deposit for a better mortgage rate. Over the next two
years, I paid for the bathroom to be re-done at £7.5k, as well as the
windows and doors for £2.5k, so the house went from being worth £210k
to £250k... and then we broke up. She had contributed 50% to all the
mortgage payments, and was entitled to 50% of the house - it cost me a
further £20k to 'buy her out'.

It was a lot of money to scrape together... but I ended up with a
property and she went back to moving around and renting for a couple
of years, so actually wound up a little worse off than myself - even
after a £20k payment.

In the grand scheme of things; 12,500 is a drop in the ocean. Having somewhere to live is better than nothing, and you'll still have a decent amount of savings behind you.

I appreciate you no longer want to be in that particular location, and we can't tell you what to do, but whilst the house isn't selling and your ex-wife is offering you an out... I would take it.

To actually answer your (finacial) question:

What are my options in this situation?

A. Rent out the property share the profit / remaining costs while building equity until you find a buyer.

B. Lower the asking price. You may have to sell it at a loss. Too late to complain now. As they say, you make the money in buying. Looks like you bought to high. Split profit or worst case the loss.

C. Keep the house, buy out your ex. Either give her what she asks or, what´s done in other cases where the real market price is unclear: Find another buyer, while you get pre-emption right to buy at that price.

On a side note: It´s sounding like you live in the house, but you share the mortgage. Normally, shouldn't you have to pay her (half) the typical rent as long as you live there and did not buy her out?