Buying my partner out of the mortgage

misstrouble1

Me and my partner bought a property in December 2009. We have completely revamped the property since then and unfortunately broke up about 2 months ago. We have each paid for the majority of stuff in the property 50/50, and lots of work has been carried out through good will by my partners father. We have had the place valued and it has increased by £40,000. We originally bought it for £160,000 and it is now worth £200,000.
I am going to buy him out with the help of my parents and would like to know in regards to the mortgage what I owe him. Our mortgage was £120,000 and we have paid off about £1,500. Do I have to pay him back half of what is paid off the loan?

scottishblondie

If you pay him half of what has been paid off of the mortgage then he will effectively have lived there for free (putting aside the costs of the refurb). I would say if you have split things 50/50 then what you need to pay him is what ever deposit he put in + 50% of the equity - in essence his half of what you would get if you sold the property to another party. So (presumably) 20k deposit + 20k from the equity, so 40k.

misstrouble1

Thats what I thought but when I spoke to him last night he suggested that I pay him back half of that cost. Thankyou for confirming that for me!

MrsManda

If you paid 50/50 of everything and accept that the house is now worth £200,000 then I'd agree with Scottishblondie with £40k though I arrived at the figure by presuming he should get £100,000 minus his half of the mortgage amount (£60,000).

But unless you want to pay solicitors to fight it out, I'm not sure there's a law which states you have to give him X, rather you have to work a deal between you.

Are your parents going to be replacing him on the mortgage? If you have a joint mortgage the mortgage company may not let him come off the mortgage unless they assess you as being able to afford the mortgage on your own.

Person_one

Are you me a few months later? I broke up with my ex earlier this year and our property had gone up in value by 40,000 too. He bought me out though.

He should get back anything he put into the deposit, plus half the new equity (knock about £5000 off to make it a bit closer to what he'd get if you actually sold and divided the profit after fees etc.).

Basically, you are now buying his half of the property from him, its actually a pretty straightforward process if you are amicable enough.