Buying out my ex.... am I being fair?

DickyFlower

Hi everyone

I'm after a bit of a sanity check to see if I am taking a reasonable position about an equity buy out.

My wife left a few months ago and moved out of our house, which has a mortgage in both our names, and has moved in with someone else, with whom she wishes to buy a new house. This means it would be very helpful for her to cash in her share of our equity on the property.

We have continued to pay the mortgage 50/50, having always paid it 50/50, though of course now she also has rent to pay on her new home and is, not surprisingly, unhappy to be (in her view) subsidising me, though my view is that we are continuing to share our financial obligation. I have no real desire to move, so I'm going along with her suggestion and have made a few enquiries with banks about re-mortgaging and a transfer of title into my name.

Let me throw in some numbers....

the current value of our house is around £135 (that's right, I live Up North) and we have around £42k outstanding on the mortgage.

So the equity is in the region of £93k.

Originally I thought, "OK, we split the assumed equity, so I need to re-mortgage for an additional £46.5k (i.e. half) so I can basically give her that in cash and she can move forward and get on with her life". This bangs up my mortgage a fair bit, but you don't get something for nothing.

But, having received an outline re-mortgage offer from a bank, it has dawned on me that this £46.5k will actually cost me about £60k when repaid. So it does feel like I am incurring a substantial financial burden to realise liquidity for my wife. On that basis, 50/50 isn't actually 50/50, as it will cost me £13.5k to essentially take out a loan to pay her off.

I haven't worked out what I think would be a fair split, and I certainly wouldn't expect her to pay anywhere near half the interest costs I'll incur, but a straight 50/50 of the assumed equity now.

The alternative is that we sell and split the proceeds, but current life circumstances mean that it is not in my interest to sell now (new busier job and part-time studying = need for stability and I don't have the time to get into selling/buying) and, frankly, my priorities are now about looking after my own needs rather than working to someone else's agenda.

The big question, is anything other than the straight 50/50 buy out unfair? Am I being unfair suggesting that the offer I make her has to reflect the burden I'll be assuming, even if it is only a few £k difference?

jellyfish76

I'd try and forget that the money is going to your wife and focus on the fact that you will own all the property and will benefit in the long run.

Anyone with a mortgage is paying more than they borrow due to interest. You'd be in the same position if you moved to a home with a bigger mortgage - you'd still be paying interest to the bank.

If you don't wish to do so, you will have to consider selling up.

If you want to stay put, focus on your future... look it as a way for you to move on with your life.

Thrugelmir

DickyFlower wrote: »

On that basis, 50/50 isn't actually 50/50, as it will cost me £13.5k to essentially take out a loan to pay her off.

No it's not. It's enabling you to remain in the property and ultimately own a 100%.

If you sell the property then you are going to incur considerable costs and hassle.

michelle2008

Sorry but I think you are being unfair. In my view, and having been there, you need to look at it as if you are both selling up to go and buy new homes - which in effect what you are doing. The new home you are buying just happens to be the one you already own half of. She won't ask you to help her with the interest on her new mortgage - so why should you get help?

You will make savings by staying put rather than moving to a new house - stamp duty, redecorating, removal vans and possibly mortgage arrangement fees if you are doing a straight equity buy out.

Speak to your solicitor though. Mine was great. Make sure you are happy with the house valuation.

Good luck

DUTR

DickyFlower wrote: »

Hi everyone

I'm after a bit of a sanity check to see if I am taking a reasonable position about an equity buy out.

snip

The big question, is anything other than the straight 50/50 buy out unfair? Am I being unfair suggesting that the offer I make her has to reflect the burden I'll be assuming, even if it is only a few £k difference?

In effect it's 50/50 of the equity less any arrangement or legal fees, any agro, consider just selling up.

ACG

You cant expect your ex to pay any of the interest on the equity can you?
I think half the equity is fair - personally. You would have to pay interest on any loan you took out whether on this property or another.

DickyFlower

Cheers everyone - glad I asked. My feeling was that she is realising her half at no cost and I still have the liability of ownership, but thanks for your feedback.

silvercar

You buying her out, gets rid of the financial liability she has (the mortgage) and allows her to buy a new property both of which have value to her.

Also if you were selling up, you would lose from the equity, the legal costs and estate agent fees.

amnblog

DickyFlower wrote: »

I still have the liability of ownershipQUOTE]

If you don't want the liability of ownership - sell.

dimbo61

Do you have kids?
If not then 50/50 sounds good and she and her new partner have the expense of buying a new place and paying Interest on the mortgage.
Many couples in your situation have problems for years with one renting and the other stuck in a property they cannot afford to maintain as well as cover the mortgage.
Give her half the equity and move on with your life

mrginge

If you're asking her to pay towards your future interest charges, then she should also be entitled to a proportion of any future increase in equity.