Buying out of a Mortgage? Help Please

Manchesterunhomed

Hi,

I need some advice please. I co-own a house which has now been valued at £115.00K
We bought the house for 95K and got a mortgage for 85K. Only been in the house less than a year and now need to be bought out of the house. What would i get from my ex? and how much should he really pay me? We made joint contributions to the mortgage payments and house payments (water/gas/phone. etc) and are now both going separate ways. I have agreed to him buying me out dependant on if mortgage lenders will let him take on mortgage (think they will as his parents will co-sign).
There is around 85K left still on the mortgage. And we both put into the 10k deposit. We are happy with how we will split the deposit; its how would the rest of it work out? Is it just the equity he has to pay me or for the whole-half of the house I own?

Thanks
Manchester, UK

CLAPTON

if you paid equal deposits and paid equally towards the mortgage and bill, it would be fair to share the equity equally

so if its true worth is 115,000 and the mortgage is 85,000 then that means there is 30k in equity which means you should walk away with half... 15k

you may feel it would be fair to share any remortgaging or legal costs or you may consider that you will incur these yourself if you are to buy another property

tyllwyd

Who has valued it at £115K - is it an estate agent's valuation of the price that you should put it on the market at, or a surveyor? The EAs valuation is likely to be more optimistic than a surveyor's valuation - they might be saying put it on the market at £115K and hope to get £105K, in which case it seems a bit unfair to expect your partner to buy you out at the full price.

If it was me, considering it is only a year and house prices aren't shooting upwards, I'd say it was fairer to assume that the value of the house is the £95K that you paid for it, and split what is left once the deposit has been taken out 50/50.

Richard_Webster

If ex takes on extra mortgage of £15K then total liability is £100K which gives LTV ratio of 86.96% on a value of £115K which some lenders will be very windy about.

If ex knows you "need" to be bought out (e.g. you have new partner and ex knows you want to buy together) then he is going to offer less, isn't he? You can't get new mortgage until you are off this one.

If you don't care about your future credit rating (if he runs up arrears on a still jointly owned property and they damage your credit) then you could indicate that if he doesn't pay you £xx,xxx then you will disappear and he will have a job finding you when he needs to sell the property.

OK these scenarios are a bit extreme but you can see that whilst logically he should pay half the difference between the value and the mortgage the precise figure will depend on the negotiating positions of the parties. It would also be logical, but don't tell him this, for the reasonable costs of an eventual sale to be deducted from the value because he wouldn't get the equity on the sale price itself figure but on perhaps £2K less to account for the legal and agents fees.