Separating - Pay off mortgage or not?

[7184c]

Later this year the ERC goes down to 1% which is lower than the interest rate.

Have the cash to pay it off c250k however wife and I are separating. She doesn’t work currently and is going to stay in the house until kids are 18. Proposed 50/50 split in equity with option to buy each other out if she wants to have someone else move in or move elsewhere.

Expect the cash will be split 50/50 at best when divorce is finalised so thinking I should pay it off and reduce the cash split rather than refinance and pay a higher interest rate but have more cash leftover.

I’ll be paying her almost 20k a year in child maintenance etc. She’s early 30s so has earning potential.

Has anyone else been in this position as any advice appreciated.

I will be renting my own place and have no aspirations to buy now so don’t need the cash. I’ve paid everything for the last 10 yrs - I just want to have a decent amount of disposable left over for putting myself first for a change but if this means she might go after more of the residual I might need to reconsider.

[jonsp]

7184c said:

Have the cash to pay it off c250k however wife and I are separating. She doesn t work currently and is going to stay in the house until kids are 18. Proposed 50/50 split in equity with option to buy each other out if she wants to have someone else move in or move elsewhere.

Expect the cash will be split 50/50 at best when divorce is finalised so thinking I should pay it off and reduce the cash split rather than refinance and pay a higher interest rate but have more cash leftover.

Does she/her lawyers know you have the cash to pay the mortgage off?

[alscar]

Thankfully never been in that position but hope it goes as well as it can.
My first thought is that you should probably speak to your solicitor.
Just reading it though without any knowledge of your actual financial circumstances my knee jerk thought is actually not to pay it off.
If as you say she may well get a minimum of 50% and as much as 75%(?) that needs to take all the circumstances into account.
Somehow I think having a mortgage sitting there may be of more “value” to you rather than a sum of money which she may ( or may not ) be aware of.

[7184c]

Thanks. She does know about having the cash to pay it and considers it joint funds. I’m at the point where I’m not really fussed about having stacks of cash in the bank or owning a property and value time with my children, health and happiness more. I have a relatively stable job which means I should always have a decent level of income to cover a comfortable lifestyle.

I did ask the lawyer and they said it needed another specialist to review and advise but I tend to go with gut feel which is telling me to pay it off. She seems ambivalent at the moment and I guess the risk is when solicitors start getting stuck in she might change her mind or that court award more than 50% equity in house (c500k) which we have agreed verbally. She’s not in a position to get debt to buy me out now and I don’t want the disruption to the kids of having to move by selling up. I’ve been advised to maximise my monthly outgoing costs in rent etc within reason.

[alscar]

7184c said:

Thanks. She does know about having the cash to pay it and considers it joint funds. I m at the point where I m not really fussed about having stacks of cash in the bank or owning a property and value time with my children, health and happiness more. I have a relatively stable job which means I should always have a decent level of income to cover a comfortable lifestyle.

I did ask the lawyer and they said it needed another specialist to review and advise but I tend to go with gut feel which is telling me to pay it off. She seems ambivalent at the moment and I guess the risk is when solicitors start getting stuck in she might change her mind or that court award more than 50% equity in house (c500k) which we have agreed verbally. She s not in a position to get debt to buy me out now and I don t want the disruption to the kids of having to move by selling up. I ve been advised to maximise my monthly outgoing costs in rent etc within reason.

I get all that but all I would say is having seen the aftermath of a divorce of my wife’s best friend the husband did much better out of it than he deserved to and he was absolutely not putting his children first.
He just had a much better solicitor.
Courts will obviously take the mortgage into account when deciding and nothing to stop her assuming a mortgage with added costs such as maintenance etc coming her way.
Maximising your monthlies won’t happen with no mortgage payments.
Having cash available for things like spending on your children which depending on their ages includes potential for cars and driving lessons etc might be a diametric difference to what my wife’s friend has experienced with him “ not caring “ about this.

[7184c]

Some good food for thought. The intention is if mortgage is paid there would be a charge on the house in my favour. Then there would be a series of trigger events which would lead to her having to buy me out, vice versa if she moves or the sale. This would be someone moving in, remarriage and kids getting to 18.

She is likely to get part time or ad hoc cash work and still expect support.

Having looked at monthly support costs plus my own rent and living costs, if I don’t pay the mortgage off I’d need the cash reserve to be able to cover it.