Buying ex Partner out of the house questions?

sanaxe1 · 11 Jan 2024 at 15:41

Hello, me and my partner have broken up and I am looking to stay in the house and buy her out by paying her the cash amount of the equity which has been built up which she has agreed to. My questions are :

1. Does this need to be done by a solicitor or can I write up an agreement saying she agrees to transfer her share of equity in the house for X amount of cash and she agrees to be taken off of the morgage and get it signed dated and witnessed? And then contact the bank to remove her?

2. Has anybody ever removed somebody from the morgage and added a new person on? Do you think i can do this while keeping my existing morgage agreement which has 2.5 years on or will I need to take a new morgage out.

Regards

dirtychinchilla · 11 Jan 2024 at 15:44

I have no experience with this, but if you're going to be giving someone lots of money, it would seem prudent to involve a solicitor.

john_smith · 11 Jan 2024 at 15:46

sanaxe1 said:
2. Has anybody ever removed somebody from the morgage and added a new person on? Do you think i can do this while keeping my existing morgage agreement which has 2.5 years on or will I need to take a new morgage out.

YMMV but if affordability was calculated on both of you at the time....the mortgage company might say that you can't afford the mortgage on your own....regardless of you actully being able to afford it or not.

Terminal_Boy · 11 Jan 2024 at 15:53

Get everything handled by a solicitor so everyone knows where they stand.

GravyMonster · 11 Jan 2024 at 16:14

john_smith said:
YMMV but if affordability was calculated on both of you at the time....the mortgage company might say that you can't afford the mortgage on your own....regardless of you actully being able to afford it or not.

This is very true and unfortunately happened to my neighbour when his missus up and left. He had to sell up and move in the end, but it took at least 18 months for it to get sorted. If you've only got 2.5 years left on the mortgage it's possible you could end up dragging it out that long.

sanaxe1 · 11 Jan 2024 at 16:18

While I can afford to run the house by my self. I know i wouldn't pass the affordability test which im assuming is my wages x 4.5 which wouldn't meet the current amount to be paid off on the morgage. However my mum has agreed to come onto the morgage with me and she is morgage free and earns nearly double my ex partner. I've just got off of the phone with the bank after 5 times of trying to get through and they said they are happy to provide the solicitor and happy to remove my ex and put my mum on providing everyone agrees.

john_smith · 11 Jan 2024 at 16:24

sanaxe1 said:
While I can afford to run the house by my self. I know i wouldn't pass the affordability test which im assuming is my wages x 4.5 which wouldn't meet the current amount to be paid off on the morgage. However my mum has agreed to come onto the morgage with me and she is morgage free and earns nearly double my ex partner. I've just got off of the phone with the bank after 5 times of trying to get through and they said they are happy to provide the solicitor and happy to remove my ex and put my mum on providing everyone agrees.

That sounds like a positive outcome.

jpaul · 11 Jan 2024 at 17:18

you are dividing the equity at the current (suppressed) property costs ? - I could see an argument where you agree to pay some average of the equity (e: valued over) over a year or so,
or have an initial payment based on todays value, with subsequent adjustment. ?

Participant · 11 Jan 2024 at 17:37

jpaul said:
you are dividing the equity at the current (suppressed) property costs ? - I could see an argument where you agree to pay some average of the equity over a year or so,
or have an initial payment based on todays value, with subsequent adjustment. ?

Along these lines, how on earth do you even begin to calculate an acceptable / reasonable payment for her equity? Sounds like an absolute nightmare.

I'm in a situation where we maxed out our mortgage based on affordability as perceived by the banks two years ago when rates were very low, but need to remortgage and no longer pass affordability tests despite earnings £20k+ more than I did at the time. I know I can afford it and their tests are ****.

Doesn't help that the wife decided that she didn't fancy working any more though!

ristac · 11 Jan 2024 at 21:43

Other thing to consider, if you sold the house and divided what was left, there would be estate agent fees involved which would be split and solicitor fees. Once you’ve paid them off, if you decide you can’t afford it and put the house up for sale, there is only you to pay those fees.

Pudney · 11 Jan 2024 at 21:45

I went through this recently, my research at the time was that the person buying out the other person was better off having a solicitor, the person exiting ownership he much less reason to use a solicitor.

If buying someone out there are legal steps to take, e.g. getting permission from mortgage company and land registry forms to complete and submit.

SpeedFreak · 11 Jan 2024 at 22:22

jpaul said:
you are dividing the equity at the current (suppressed) property costs ? - I could see an argument where you agree to pay some average of the equity (e: valued over) over a year or so,
or have an initial payment based on todays value, with subsequent adjustment. ?

Even if it's suppressed today, who knows what it will be worth in a year and that should be irrelevant. The ex receives cash based on a current fair valuation and can choose to invest however they wish, savings interest, another property. None of that is the OPs problem.

jpaul · 12 Jan 2024 at 11:23

if the rental housing costs to the partner leaving will become disproportionately higher than their contribution to mortgage , that's another reason to have a non-equal division.

for the reamainer - is stamp duty payable as a percentage of what a complete purchase would incur.

SpeedFreak · 15 Jan 2024 at 09:33

Again, that is their problem. You don't get to split up with someone and then ask for a higher % of the equity because you decide to relocate to South Kensington. Where they chose to live after the separation is their business. What they pay for rent is their business (including if they end up paying nothing where in your scenario the OP should keep more of the equity???).

jpaul · 15 Jan 2024 at 10:23

if it's amicable, costs of renting, for a period, are all part of the plot ..
what's the stamp duty deal then, on a buy-out ?

D-Ranged · 15 Jan 2024 at 21:49

I went through this in 2022/2023, although I was the one getting bought out by my exes parents.

My bosses misses is a divorce lawyer (and an equity partner) at the company I work for. She sorted it all out for me and my ex as we were and still are amicable.

The main things we used the solicitor for, was transferring the equity she owed me, and signing some paper work to say that the house is hers, I have no more interest in it, and I can't decide in a few years I want the extra equity it's made etc.

The process we went through, which we agreed between us was -

- Get house valued by multiple estate agents

- Work out equity from the average of the valuations and removing what was left on the mortgage.

- Give solicitors that info and they dealt with the rest

I could have asked for more due to me paying a lot more of the mortgage off, but because I didn't really have anywhere to go, had two cars and a garage full of tools and other things, which she agreed to keep there, I just did what was for my best interest.

Obviously every situation is greatly different.

Haggisman · 17 Jan 2024 at 11:15

jpaul said:
if it's amicable, costs of renting, for a period, are all part of the plot ..
what's the stamp duty deal then, on a buy-out ?

Maybe in jpaul land....

Meanwhile in the real world, if I decide to split with my GF, I don't get to decide 99% of the equity in the house is mine just because I decide to rent a 15 bedroom Mansion :rolleyes:

Semple · 17 Jan 2024 at 11:24

jpaul said:
you are dividing the equity at the current (suppressed) property costs ? - I could see an argument where you agree to pay some average of the equity (e: valued over) over a year or so,
or have an initial payment based on todays value, with subsequent adjustment. ?

Do you get to reclaim costs back from the other person if the house value further decreases? If they had to both sell now then they get today's value for it, not what it might have been worth last year.

Participant said:
Along these lines, how on earth do you even begin to calculate an acceptable / reasonable payment for her equity? Sounds like an absolute nightmare.

I'm in a situation where we maxed out our mortgage based on affordability as perceived by the banks two years ago when rates were very low, but need to remortgage and no longer pass affordability tests despite earnings £20k+ more than I did at the time. I know I can afford it and their tests are ****.

Doesn't help that the wife decided that she didn't fancy working any more though!

Unfortunately a lot of people fall into this trap and become mortgage prisoners when value of the house changes drastically, or the amount of household income changes significantly.

I guess you'd get stuck on SVR until you can meet affordability checks?

HungryHippos · 17 Jan 2024 at 12:56

Participant said:
Along these lines, how on earth do you even begin to calculate an acceptable / reasonable payment for her equity? Sounds like an absolute nightmare.

I'm in a situation where we maxed out our mortgage based on affordability as perceived by the banks two years ago when rates were very low, but need to remortgage and no longer pass affordability tests despite earnings £20k+ more than I did at the time. I know I can afford it and their tests are ****.

Doesn't help that the wife decided that she didn't fancy working any more though!

You can usually re-mortgage with your existing lender without going through a full affordability check I think. I could online with Nationwide anyway.