Debt Questions forum. General questions on debt issues.

Moderators: TalbotWoods, JaneClack

By richie222
#3390 A few years ago I went through a very bitter divorce. The outcome of this was that my Ex wife would be responsible for making the interest payments (while living in the house) while I would be responsible for the Endowment payments (Joint Mortgage). This has been going smoothly BUT it has come to light over the last couple of years that the endowment is going to fall short by a considerable amount (estimate is over £8000 and this was two years ago).

What will happen when the Endowment matures?

My new partner and I would like to get married but she is concerned this will affect her financially. The house we live in is in her name (the mortgage is in her name only) alone and will remain so even after we marry. Will her house be at risk if we marry? I pay half the bills in the house, does this change anything?

My ex is on benefits so I expect the mortgage company to chase me for the money. I have no intention of paying any of this shortfall. I understand this will affect my credit rating which does not concern me at all, BUT will any of my assets be at risk. Bank accounts, car, shares etc..? Can they force me to make someking of financial contribution?

Should my partner worry about any other of her assets being at risk is she marries me?

What options are open to the Mortgage Company, will they go for the house as the mortgage is secured on it or are there other options open to them which will directly affect me?

Any guidance would be appreciated.
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By JaneClack
#3393 You are right - they will chase you for the shortfall and they will keep chasing and may go for court action. You are the one with an income. This, is, of course, after they have repossessed the property and your ex-wife has done what she can. I understand why you are cross but the fact remains that the house is in joint names. The only thing you could do to possibly avoid this is start making provision to build up the expected shortfall with another investment vehicle - another endowment or ISA for example.

If you are paying half the mortgage when you say half the household bills and it becomes apparent to any creditor that you may have a beneficial interest in her property they could go after that if they were to threaten you with bankruptcy. This is whether or not you are married - but of course this would be the rent she is charging you!!!! (However, they are unlikely to sue you for bankruptcy for a shortfall - a very worst case scenario when they would look at all assets you had).

This is something you need to discuss with your new partner as you need to work out a plan.
ByTootsie Roll
#3394 Very very unlikely the mortgage company will take any form of legal action over an endowment shortfall unless the account is already in arrears. If it is allowed to carry on to the end of the endowment term the mortgage company will most likely simply re-structure the loan and extend the term on a repayment basis.

You are quite right to be concerned about it now though as you will need to do something and as Sarah suggested it would be a good idea to take out another form of investment vehicle or contact the mortgage company and find out if they have a solution for you. They may be able to allow you to pay the repayment part of £8,000 whilst allowing your ex to carry on with her Income support payments.

You say you have no intention of paying the shortfall but quite simply you have no choice.
By JC
#3395 As Sarah and TR have suggested it might be a good time to contact the Mortgage comoany and see if they have a solution.

I think its unlikely that the current situation with your new partner and her property would be affected by the shortfall as there is to be no Transfer of Equity (property will stay in your partners name and not joint) so whether you are living together over the brush or married should make no difference as you are just paying your way.

How long have you got to go on the endowment mortgage with your ex-partner ? have you looked into the possibilty of changing the scheme from Interest only to repayment ? Is it possible to extend the current mortgage beyond the current term to reduce the payment to allow for another investment vehicle to be established ?
By richie222
#3409 I have previously offered to switch to a repayment mortgage but my ex wouldn't do it. There is about eight years to go on the endowment.

As long as they go for the house first, this is fine by me.

The shortfall, lets say £10,000 is only going to be about 15% of the value of the property. So if they repossess the house the debt is paid? Is this correct?

I have a 25% legal charge on the property as part of the settlement, would the bank take this as payment?

I've heard some banks will except a part ownership of the property as payment, do you know anything of this?

Thanks for the replies, It has been worrying me for ages.
ByTootsie Roll
#3411 [quote="richie222"]
As long as they go for the house first, this is fine by me.

quote]

No it isn't it will still affect you - you will not be able to get any further credit, could affect potential job applications and more.

Do you have any children with your ex ?

To answer you question about the 25% charge - yes the bank have a 'first' charge and will take whatever they need before you see a penny.
By JC
#3441 With only 8 years to go on the endowment it might be a good idea to keep hold of it even if it is nor going to cover the mortgage it will gaive you a level of insurance and will provide more capital at the end of the policy than it would if it was traded in (I know that you have not mentioned this option but ..)

I would request a scheme and term change quote from your provider. request a quote to change to Repayment over the current term (will be more than you are paying now) and over the maximum term available (not knowing how old you are this could possibly extend the mortgage over another 25 years but with lower payments) it might give you the breathing space you need to realise the capital in the endownment which can in turn be paid into your repayment (you should be out of the repaytment interest period by that point) further reducing the payments and securing the property.

You said that your ex was against it before but ask for a quote (shouldnt cost anything unless you actually accept the scheme change ) it wont harm to know your options and have them on paper in front of you as you and your ex sit down to discuss your future actions.