Mortgage & Divorce: A Catch 22 position

Sunday, 2nd August 2009 13:29 - by Resident IFA

I’m back! Did you miss me? Ok, best to leave it there - don’t ask questions that you probably don’t want to know the answer to… I arranged a Mortgage for a Couple around five years ago. Much as it is none of my business to assess Client’s characters, I felt the Husband was a rogue, cad, bounder, etc. It took a few years, but he did the inevitable and proverbial ‘bunk’, leaving his Wife high-and-dry. Now, the Court, in finalising the Divorce in his absence, is urging her to re-mortgage or ask a family member to be a Guarantor for the mortgage, knowing that the existing lender will not allow the mortgage to be transferred to her sole name due to her income situation not satisfying their stipulated affordability criteria. Her family cannot act as a Guarantor as they have decent-sized mortgages of their own, and no other lender will consider her for a re-mortgage as the loan to income ratio is in the 6 to 8 times region, most ‘standard’ mortgages being in the 3 to 4 times income range. So, where does she go from here? “Sell the property and down-size”, I hear you say. It is not that easy in the sense that she has two growing children and the house isn’t huge to start with. One interesting point is that she has been happily, but not without great work, affording and paying the mortgage since her Husband left. Now, I know that we live in anything but a bespoke world in mortgage terms, but I sometimes think that Lenders/Underwriters really need to get as deep as they can into understanding an individual’s circumstance and ‘real’ affordability – especially in cases such as this. I have referred the Client onto a very professional Solicitor I have recently met via networking. I hope he can impart some pearls of wisdom, the currently appointed (State) Solicitor seemingly only intent on a ‘box-ticking’ exercise, rather than offering pro-active suggestions as to the way forward. If you are reading this and have encountered a similar situation, I would be interested to know how it was resolved…for good, bad, or indifferent. Until next time…