lost - do i have to have paid off 25% mortgage to be landlord? will tax credit change?

[someonesgirl]

in brief: need to sell house, cheating ex left over yr ago, 2 young kids, he still pays over half mortgage, need to cut ties. cant sell house cos stand to loose 22 grand or more, planned to rent it out and move in with new boyfriend. new boyfriend has 2 kids also from previous relationship that he has part time. will this affect my tax credits? as we would be living together as a couple? but could it as he isnt going to pay for MY kids as he has his own?! so confused. spoke to a frien tonight h ai the mortgage company wont give me a landlords mortgage account to rent it out unless ive paid off 25% of my mortgage!!!! which i havent as its been interest only for the whole 5 yrs so far!! is this the case with all mortgage companies!? in which case im screwed. if i sold, how do i pay off that sort of debt?? how much will i be expected to pay a month?? im only scraping by as it is now! i welcome any advice. im very scared right now : (

[Richard1966]

The rules regarding renting your property will be to a extent up to your mortgage lender. Your current mortgage will be based on it being your residence rather that as a business and this will change the tax position of your self and the interest rate on your mortgage. Given that many landlords have issues with tenants and cash flow problems as a result i can understand why the lender would want some equity as a cushion buy the final decision is up to them.

Tax credits are a means tested benefit, most changes of circumstance will effect the amount you get. This will have am impact.

[CheekyChops]

You won't be able to sell unless you pay off the whole mortgage.

How much is your house worth and how much do you owe on your mortgage? What do you mean by 'stand to lose 22 grand or more'?

[bednobs]

plus what does the ex say?

[themas]

1.If your present tax credit claim is as a single parent (which it should be), then as soon as you move in with your new partner you must tell the Tax Credit Office. Your present claim will end and you must take out a new couple claim. This will be based on your partner's income as well as your own. Whether he is paying towards your children's costs is irrelevant. There will be an allowance in the claim for your own 2 children. If he only has his own children part time & their main carer (normally defined as the person getting Child Benefit) is someone else then his children can't be included in the claim.

2. If your present claim still includes your ex-partner then you must do something different immediately. If that is the case, post again & I will advise you.

3. You are unlikely to be able to do anything about the house without the agreement of your ex. Also, if it is in negative equity (which I assume from your mention of losing £22K) the mortgage lender will probably not agree to you selling it anyway. You say your ex is paying over half the mortgage, so I assume you are paying the rest. How much are each of you paying each month? How much is the house worth & how large is the outstanding mortgage?

4. If you can't afford to go on as you are, you could stop paying the mortgage. Unless your ex then paid all of it the lender would then repossess the house & sell it. You & your ex would both be jointly & severally liable for the whole of the resulting debt. You would then have to come to an arrangement with the lender to pay this off over a period - how long it would take would depend on how much you could afford to pay. Alternatively, you could dispose of the debt by going bankrupt but whether that is wise depends on your financial circumstances as a whole, & you would need advice (e.g. from local CAB or CCCS - by phone).

[Postdog]

Maybe not relevant, but the other thing to consider about letting your house out is that it has to comply with certain stadards and expectations by law. I mention this because I too considered letting, only to be told by someone in the know that in the state it was, it could not be let out, even though it was clean and habitable.

[boxtops]

I agree with what's been said before - basically, you can't just move out and rent the house out without the agreement of your mortgage lender. You'd also have to have landlords' insurance, etc- it's not as straightforward as you seem to think.
Can't you stay in the house and your bf move in with you? - but then I would be pretty certain that benefits will be affected, as they take all income into account.
You would need to clear all this with your ex though, he still has a say as to who comes to live in your house I believe, while the children are so little, and in name he is presumably stil part-owner of the house as he's paying half the mortgage.

[someonesgirl]

right, thanks all. have looked into the mortgage and they say i have to have paid off 15% which i havent so renting is out of the question. plan to sell and i presume make arrangements to pay off the debt. yes i do have a single person claim. he barely sees te kids let alone have them over night, by his own choice. we bought the house for 118000 and borrowed 122000, one estate agent said its not likely to go for more than 100000 so together with solicitors fees and 3700 for paying off loan early im looking at a big debt. i plan to put it on for what i paid for it and see what happens. i didnt realise the mortgage company can say im not allowed to sell it, so best check with them first.