Splitting up with partner - mortgage issues

76giraffe

My partner and I are going our seperate ways. We have owned a house together for two years and since he wants to stay there I'm going to have my name taken off the mortgage and deeds and he's going to buy me out. But we don't know where to start calculating how much he pays me! It's all amicable so although we'll be consulting a solicitor there's no need for complicated legal arrangements, and to a certain extent I want it to be as easy as possible. Does he pay me back all the money I've paid into the mortgage and then half of the current profit of £10k? Does he pay me half the value of the house? I have no idea so any advice would be welcome please. Thanks.

Rikki

The first step is to get the house valued. you will then have an idea of the equity in the property. You will be entitled to half of this figure. Was there a joint deposit paid?

irnbru_2

76giraffe wrote:

I have no idea so any advice would be welcome please.

Here's a few threads on the subject ...

Forcing a Property Sale

Relationship breakdown and house sale?

Q: Girlfriend moves in to my new house with me - what are the risks?

Is a partner entitled to a % of your home

A post from BossyBoots

Robert_Sterling_3

Your and your partner will need to get a realistic valuation.
i.e. Not an estate agents suggested selling price.
You need to make some allowance for who paid what on day one
i.e. Deposit, stamp duty, solicitors fee.
You might expect to get pack the element of your monthly mortgage contributions which was the capital repayment element.

A good test of what would be appropriate is how much would partner want if you were to take on the house.

Glad to hear it is not an acrimoious separation.

AndrewSmith

Hi,

I've dealt with quite a few of this type of situation recently. It is quite straight forward.

In simple terms you will currently be joint legal owners of the mortgaged part of the property in equal proportions. This is because whoever is named on the mortgage is "jointly and severably liable for that property and associated debt upon it". It is up to you how you divide the remaining equity over and above the mortgage amount.

It works like this : Example figures assuming a 50/50 split of equity.

Mortgage £100,000
Value of House £180,000
Your original deposit £10,000
Partner's " " £5,000

Basically it would work like this:

Your partner would have to re-mortgage the property in his sole name. This gets you off the deeds and the mortgage.

Within this re-mortgage he will need to include the amount he is raising to "buy you out" which would be calculated as follows: (using the assumed figures above)

Equity £80,000
Less Both original deposits £15,000
Total £65,000
Less Remortgage fees £500.00 (approx)
Total £64,500
Divide in half £32,250
Add your original deposit £10,000

Your entitlement £42,250.

Therefore your partner will need to re-mortgage (using these figures)
for £142,250 (original mortgage plus your "pay off").

Hope this makes sense?

If not come back to me and I'll try and explain it a bit better.

Cheers

Andy

Robert_Sterling_3

AndrewSmith wrote:

Total £64,500
Divide by half £32,250
Andy

When I was a boy we called this diving by two
or multiplying by a half.

But that was before GCSE !

76giraffe

Hi Andy,

Thanks for your detailed reply, it makes it a lot clearer. Just one question though, do I get back any of the money I have paid off the mortgage over the two years that we jointly owned the property? We both paid half each so it's easy to calculate....?

Cheers,

76giraffe

AndrewSmith

When I was a boy we called this diving by two
or multiplying by a half.

But that was before GCSE !

Robert, I too did not take GCSE, only O level the A level, then BA (hons). Besides I don't think my momentary lapse of grammatically correct English has in any way detracted from the accuracy of the implied scenario in my previous posting.

Giraffe, to answer your question,

There are two things to consider here.

1) If the mortgage balance has reduced in the last 2 years you will be automatically getting some of that back in the equity of the property.

2) Whilst I agree you have been paying half of the mortgage for the last 2 years you will not be entitled to a return of that money as you have had the use of the house for those 2 years. It's like asking for your rent money back when you leave a holiday home.

Valid point though and well worth clarifying.

Hope this is helpful

Cheers

Andy

RiskAdverse100

Why does Giraffe's partner have to remortgage the property in their sole name? This could involve early repayment charges applying.

If the current lenders are happy with the partner's financial position the existing mortgage and the property can be transferred into their sole name.

RiskAdverse100

Robert_Sterling_3

AndrewSmith wrote:

Robert, I too did not take GCSE, only O level the A level, then BA (hons). Besides I don't think my momentary lapse of grammatically correct English .... Andy

The English was OK and the advice was OK it was the maths that was wrong.

AndrewSmith

The mortgage can be 'taken over' by the partner however even if this is with the same lender there will still be legal work (ie re-registering the property deeds and land registry to notify the change of legal ownership, and change of the legal charge on the property.)

When a mortgage is transferred into one persons name in such a case it will be treated by the majority of lenders as a new mortgage account owing to the fact that the legal charge and mortgage deed details will change.

They may be happy to accept the original loan amount at the existing rate with the existing terms and conditions however the additional borrowing will be subject to current underwriting and available rates. You may also have to pay a valuation fee and arrangement fee for the additional borrowing, thus a re-mortgage. This means you could end up paying 2 different rates.

You would need, obviously, to speak with your current lender to see what they can do, however the term re-mortgage is correct in this case as changes to the original mortgage are being made, and additional borrowing being taken up.

By using the term re-mortgage I was not implying that they should seek an alternative lender in the first instance.

Hope this clarifies

Andy