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Page last updated at 08:01 GMT, Thursday, 9 April 2009 09:01 UK
Crunch couples 'stuck together'
By Jim Reed
Newsbeat reporter

One couple who've split up explain how they cope with living together

More young couples are being forced to live together after they break up because they can't sell their house.

The 'worrying rise' of those forced into staying together is down to the credit crunch, according to firms that advise on new home loans.

Thousands of first time buyers have taken out a joint mortgage in the last five years.

However, the state of the housing market means couples are finding it hard to sell after breaking up.

Many banks and building societies are also less likely to let one person take on the mortgage as the UK moves deeper into recession.

'The only choice'

Some couples are choosing to stick it out and continue living together after the split.

Helen and Jim bought a two-bedroom flat in Coalville, Leicestershire, a couple of years ago when the market was booming.

"We were together for about a year," says Helen, 26, "and then we split up.

Now the market has turned down, people are being dumped and they can't just walk away
Chris Cummings, Association of Mortgage Intermediaries

"We decided the only choice was to stay together and keep the house.

"When Jim has friends over, I am just stuck in my bedroom.

"My friends think we're crazy, really. Some days it's fine and then we'll have bad days when Jim really drives me mad."

"It's been on the market for over a year but there's been absolutely no interest so we're stuck here until it picks up again," says Jim, also 26.

"You can't start anything new or move on."

Young buyers 'hardest hit'

Financial advisors reckon they are seeing a "worrying rise" in cases like this as house prices fall and new mortgages get harder to get hold of.

"We are absolutely noticing it's a growing problem," says Chris Cummings from the Association of Mortgage Intermediaries.

"It could be that you've bought a house with your boyfriend, girlfriend or best friend.

"When times were good, it wasn't a problem but now the market has turned down, people are being dumped and they can't just walk away."

Mortgage application
Many banks won't let one person take on the whole of the mortgage

The research group GfK NOP reckons that nearly four million homeowners are in, or close to, negative equity, where their home is worth less than their mortgage.

The report found that people aged between 25 and 34, young couples and young families who took out mortgages with a small deposit since 2005 were most at risk.

Nearly a million first-time buyers under 30 have taken out a new mortgage in the last five years - almost half of those are living with their boyfriend or girlfriend.

'Few options'

Negative equity is only a big issue for homeowners if they need to move out and can't wait for the housing market to recover.

Couples that have split up will have to pay back their entire mortgage if they want to sell their house and move on.

"You can sell at a loss but you are going to have to make up the difference to walk away," says Andrew Elson from Bates Investment Services in Leeds.

"One option is to get a personal loan to clear that debt. It might not sound appealing but it could be the only option you've got.

"One person might be able to buy the other out but you'll have to come to some sort of arrangement about splitting the loss on the place."

The credit crunch also means that banks are less likely to let one person take on the mortgage as they might not think they'll be able to keep up repayments.

There are other options for couples who find themselves in this situation, though.

It might be possible to cover mortgage payments by renting the house out, although that will require permission from the bank or building society that originally granted the mortgage.

Even without that permission, it is possible to rent out a single room to a tenant.

The first £4,250 you earn from that will be tax-free as well.

Andrew Elson also suggests trying to increase the value of the property by taking out a small bank loan, and carrying out improvements or getting a parent or guardian to guarantee part of the mortgage repayments.

"The only way to move out is either to pay back some of that debt or increase the value of the house. So the faster you can save, the sooner you will be out of the situation," he said.

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