Property transfer and letting to ex
I have posted here previously, things have now moved on. I have trawled through the forum but cannot see if anyone has come up with this "idea" before.
As I am sure so many of you have, we applied for no fault divorce on 6th April when that came into force and is now underway. Now the difficult part, property and finances.
I left the matrimonial home and am now renting a small 1 bedroom flat. Ex lives in the family home with the 2 children, aged 7 & 5. House is a 3 bed semi, value approx £400k with mortgage of £243k.
As is stands I pay child maintenance at the calculator rate and half the mortgage. But I cannot carry this on much further, my finances are too stretched and I have no option to rent anywhere bigger to provide enough space for my children when I have them. Also no hope in being able to buy somewhere myself for several years.
My ex works but does not earn enough to be able to take over the mortgage. There is little point in selling the house as she would not be able to buy anywhere big enough on what she earns and she would be left with renting - not ideal as she would have lump sum from sale and would not qualify for any help from UC.
I have and still am of the opinion that I do not want to sell the property, it is the childrens home and they would not be able to have anywhere else as nice. But a Mesher order seems too restrictive on both her and me. From her point of view if she was to find a new partner the house would need to be deal with, from my point of view it severely restricts me being able to purchase anywhere else myself.
I am going to suggest that the property be transferred to me I will then remortgage to a buy to let mortgage. As part of the transfer I will agree to my ex having a charge over the house for the lump sum due to her, for argument sake lets just say £100k - just over 60% of the equity.
I would then propose her renting the property from me with a tenancy agreement so she is protected. I would agree to set the rent at the same amount of child maintenance. I would continue child maintenance payments so there is no argument with the CSA - but she would effectively transfer back as rent.
She would then effectively be living there rent free. The property be in my sole name, I would pay the mortgage. In the future she would then have the benefit of the charge over the property and a lump sum from that - would propose it be interest bearing and dates for repayment to tie in when children cease full time education and to allow property sale and repayment if both agreeable. I am a conveyancer and can have this dealt with easily.
She would benefit with no rent or mortgage to pay. I would benefit as the mortgage would be less than the current cost of child maintenance and cost of half of current mortgage.
Just wondering whether anybody has ever come across any agreement such as this or had any thoughts?
I have no experience with this. seems there are lot of options available. may be good idea to consult a lawyer who specialises in divorce/financial proceedings.
You would definitely need professional legal advice, though the first step would be to see if your ex would be agreeable to this. I would also think that the rental should be set at a fair price, rather than at the level of child maintenance. Also bear in mind that if you rent the house out to her, you are going to be liable for tax on that income.