Help with being bought out of a mortgage

yellowhighlighter

Hi,

My ex-partner and I bought a proportion of a part-ownership property last year in a slightly unusual way - he put down the deposit, and we both signed on to the mortgage. We both agreed to pay all the fees incurred in buying the flat. We intended to get a deed drawn up stating the relative proportions of the property that we owned (it worked out at 35% him, 5% me, 60% landlord), and that he would buy me out if we split, but didn't get around to doing this.

I didn't ever want to own any of the property, but he was unable to qualify for the part-ownership scheme without me signing on to the mortgage as he did not earn a regular wage, so I agreed to it.

Despite agreeing to split the purchasing fees, I still owe him the money for this.

Now our relationship has ended and I have vacated the property. I am happy to sign my tiny share of the mortgage over to him. I am unsure if I should do this without expecting any money in return, or if I should expect a) him to pay me back the amount I have paid into the mortgage so far, b) him to waive the debt I owe him for the house purchase fees c) something else entirely!

I would be incredibly grateful for any help offered.

divadee

How much do you owe him in fees? And how much is the property realistically worth?

Personally I would give him the property (unless it had a massive amount of equity (unlikely,) and say that's payment for fees and walk away from it all.

You can then start again with a clean break.

~Beanie~

Does he earn a regular wage now? You can't just remove yourself from the mortgage, the lender would have to be satisfied that he qualified on his own. Has anything changed since last year when he couldn't get it on his own?

yellowhighlighter

I owe him about £1500 in fees. The property is worth around £200,000, of which he owns 35% and I own 5%.

I suggested waiving the £1500 house purchase fee debt in return for changing the mortgage into his name (which the mortgage lenders have okayed) but he thought this suggestion very unfair.

Thank you so much for your replies

sdavies13

Unfair to you, maybe...

If the property is truly worth £200,000 then your 5% is worth £10,000.

On this valuation the £1500 you owe is worth 0.75% of the property. Fees for selling it, etc, would also have an effect but not enough to impact the fact that him writing off your £1500 in return for your 5% of the property is better for him than for you!

Thrugelmir

yellowhighlighter wrote: »

but he thought this suggestion very unfair.

Thank you so much for your replies

Then do nothing and retain a 5% ownership share.

beecher2

sdavies13 wrote: »

Unfair to you, maybe...

If the property is truly worth £200,000 then your 5% is worth £10,000.

On this valuation the £1500 you owe is worth 0.75% of the property. Fees for selling it, etc, would also have an effect but not enough to impact the fact that him writing off your £1500 in return for your 5% of the property is better for him than for you!

Surely this is only the case if the property was mortgage free. As things stand the OP 'owns' 5% of the equity, which is perhaps very little and less than the £1500.

yellowhighlighter

sdavies13 wrote: »

Unfair to you, maybe...

If the property is truly worth £200,000 then your 5% is worth £10,000.

On this valuation the £1500 you owe is worth 0.75% of the property. Fees for selling it, etc, would also have an effect but not enough to impact the fact that him writing off your £1500 in return for your 5% of the property is better for him than for you!

beecher2 wrote: »

Surely this is only the case if the property was mortgage free. As things stand the OP 'owns' 5% of the equity, which is perhaps very little and less than the £1500.

This is one of the main points I'm getting stuck on. I only own 5% equity in still-owed mortgage form, a mortgage which I have so far paid only £618 into, obviously less than the £1500 owed. However, if I am transferring my equity in the property over, would it be normal (or 'normal' maybe!) to be returned the £618 mortgage, £1500 purchase fees, both or neither?! I don't want to do anything unfair.

beecher2

yellowhighlighter wrote: »

I only own 5% equity in still-owed mortgage form,.

It isn't equity in this case, it is debt. If there's no equity at the moment, then I personally feel you should be paying the £1500 you agreed to pay. I don't see why you should get your mortgage payments back again as you were paying for somewhere to stay.Ultimately though the two of you have to come to an agreement you both find fair - what does your ex want? Maybe you paying him £1000 would be fair. All of this supposes he's able to take on the mortgage alone though - could well be that he can't, and if there's negative equity you might be expected to pay your half.

antrobus

yellowhighlighter wrote: »

This is one of the main points I'm getting stuck on. I only own 5% equity in still-owed mortgage form, a mortgage which I have so far paid only £618 into, obviously less than the £1500 owed. However, if I am transferring my equity in the property over, would it be normal (or 'normal' maybe!) to be returned the £618 mortgage, £1500 purchase fees, both or neither?! I don't want to do anything unfair.

Unless the property concerned has increased in value since you purchased it, then the only equity in the property will be the deposit that your ex-partner contributed, so your theoretical '5% share' will be worth exactly nothing. You simply owe your ex-partner £1500. Paying that sum will release you from any further liability for the existing mortgage.