Divorcing in UK - French house

[Scooby]

My husband and I live in the UK but have a second home in France. We are in the process of getting divorced but have agreed, in principal, that I will have the french house.  The UK house will be sold and the proceeds split - subject to the equity that I will have in the french house. The french house is subject to a french mortage and, whilst the monthly mortgage repayments were within the required limits for our joint salary, I think they will be too high for my single income.  I don't want to change the term of the loan as we have a good rate (3.8% fixed for the term of the mortgage - 15 years).  So as I will also be getting a capital sum, I was planning to make a lump sum capital payment to reduce the monthly repayments.  Hopefully, this will keep the mortgage within my means whilst retaining the favourable rate.  Is this possible and are there any other issues I should be aware of?

 

[Renaud]

Scooby, sorry to hear about your situation. You need to get someone to read the small print terms of your mortgage as French ones are notoriously hard to pay-off early or part repay.

Best wishes

[timc17]

Without wishing to ask the obvious if the French mortgage is in joint names not only will your husband still be liable for the monthly payments but will he also not be still be joint owner as shown on the deeds?

I would get the advice of an english based (or english speaking) French lawyer before you go any further. Can recommend one if you want to pm me.

[Tony F Dordogne]

I would have thought that the first port of call should be your mortgage lender, at least to get an understanding of their view on the lump sum payment.

[Scooby]

I think we can make a lump sum repayment but, depending on the circumstances, we will incur a 3% penalty charge.  I wasn't sure about being able to transfer the mortgage to a single name from joint names or if, in a divorce, you have to renegotiate a new mortgage.  If it's the latter then we would probably have to consider selling up.  I will contact our mortgage lender as you suggest Tony as I guess every bank etc is different.

[Bugsy]

I know little about this subject but would it not be possible to invest the lump sum and use the interest to top up your mortgage repayments ?

Depending on the amount of course.

[Panda]

[quote user="Scooby"]UK house will be sold and the proceeds split - subject to the equity that I will have in the french house

 
[/quote]

As the market is dreadful at the moment I would be cautious about accepting the equity in the french property in lieu of equity from your UK home  if you do end up trying to sell the french house, prices are dropping fast and house are taking forever to sell in many cases. 

[Scooby]

Neither of us can afford to buy the other out of our UK home so that has to be sold.  The monthly repayments on the french mortgage, whilst within our combined salaries, will exceed the monthly income cap if one or other of us takes on the French mortgage as is.  TBH I don't think there is much to choose between UK equity and French equity at the moment - both are sliding fast.  Our bank are working on an estimated 10% fall in the average value of UK property by the end of the year.  In fact 75% of those borrowers who have fixed rate deals via our subsidiary lender will not qualify for a new mortgage (with either ourselves or any other bank) and are expected to go into repossession very quickly.