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Thanks. I want 3...
In the example you made, the difference is that I don't need to borrow the full amount of 50% equity, so possibly the increase in deposit relative to house value will be more. Although I doubt the house will have gone up 30%, this is London so who knows. Still, regardless of how good the deposit is, if the amount I want to borrow is more than, what 5x income - it isn't possible? Do lenders take likely income from lodgers into account (in a way that makes any difference)?
hoefla-
I doubt the lender would take income from a lodger into account. It's an arrangement that doesn't exist yet, and if you were to tell them that it's your ex partner but don't worry we're still mates... I suspect they wouldn't put much stock in that.
If you're borrowing more than 5x earnings then you might have some problems. Disregard the history, disregard the fact you're already living there (because the lender will). As far as the lender cares, you're just buying a house with some equity and borrowing the rest.
You should be able to figure out fairly quickly what the house is worth (ballpark, using Zoopla and nearby sales). So you'll be able to get an idea what % deposit you have and what the multiples are. Then just look around for some mortgage deals to see what's available.
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I doubt the house will have gone up 30%
We had 3 independent valuations and chose the middle one, when it came to valuing the property after we split - no sense muddying the waters with accusations of trying to do the other one over on money.
Lenders should be looking at your ability to repay (now and in the future) based on incomings and outgoings. The multiple is just a rule of thumb. If you have lodgers, this should count in your favour.
duncs
NotThamesWater
Probably easier to understand with simple numbers, and not worrying about estate agent and solicitors costs etc.
Buy property 2 years ago for £100000. with a 20% deposit, £10k each.
Your mortgage was £80000.
In 3 years time, house prices have gone up, say to £130000. (30% increase)
Your mortgage is lower, maybe at £70000 as you have been repaying it.
1) If you sell:
You sell for £130k, and your mortgage is £70k, so you are left with £60k.
You divide this between you both, and you both leave with £30k, which is £20k higher than you put in at the beginning.
2) If you remortgage together and keep the mortgage the same
Your property is valued at £130k, and your mortgage is £70k, so you now have 46.1% deposit/equity in your property. This will give you access to some of the market's lowest rates, compared to the ones you had when you bought 2 years ago with the smaller 20% deposit. Your monthly payments are likely to reduce drastically (to the point where it is almost a good idea to review things now, even if you have a hefty penalty to change lender)
3) If you want to keep the property in your name:
£130k is the value, and the current mortgage is £70k. You need to give £30k to the other person (50% of the equity), so your new mortgage needs to be £100k. This is 23% deposit remaining in your property for you to speak to your current mortgage lender, or a new mortgage lender about.
Hope that makes things a bit clearer?