Buying out ex Partner on a property with a mortgage

gettingitsorted1980

Hi There

I have just split up with my partner, we have a house together in unequal shares, 75% / 25% in my favor.

We have worked out what I need to pay her and agreed that I will pay her some now and the balance in 12 months, when im in a better position.

Im looking for some help really, I can afford the monthly payments on the mortgage, but we have an early redemption charge which is around £8000 with just 1 year left on the current deal.

Can I buy her out and just transfer her 25% stake via land register with a tr1 form, or do I have to tell the lender.

Im worried that as soon as they find out we have split up they will charge us the £8000 redemption fee and try to force me to sell the property ?

I have a bit of debt at the moment, so if they done the affordability it might show i cant afford it but I can.

Any idea of where i stand with this ?

Help will be very well received ?

Mrs_pbradley936

Your personal arrangements do not have to involve the lender unless your girlfriend wants to borrow more money to finance a new place to live. If she insists upon doing that then you may have to sell but of course the £8000 fee would impact upon her as well.


Do not be in a great hurry to sort it all out - just carry on making the repayments.

gettingitsorted1980

Thanks Pbradley. Can I buy her 25% and then just do a transfer form via a TR1 form, my only concern is she is still listed on the mortgage and as soon as I try and buy her out and get her name off the mortgage with the lender they will try and charge me the £8000 ?

Thrugelmir

You would need to remortgage the property into your own name in order to effect a full transfer. If I was the partner I wouldn't relinquish ownership of title until I'd received full payment.

There's no reason not for the mortgage company not to allow the current product to continue. Whether you meet the current requirements under MMR is another matter. In which case retaining the property may not be option.

kingstreet

You can make no changes to the ownership of the property without the lender's consent.

A transfer of equity to remove her from the mortgage and the ownership should not trigger an ERC, but you will need to be able to demonstrate you can afford the mortgage on your sole income.

If you have to borrow more to "buy her out" that requires additional borrowing and that will also be subject to credit and affordability checks.

Typical cost of a one-off ToE is £450 to £600. The party leaving will be advised to seek independent legal advice. This will also carry a cost if taken up.

gettingitsorted1980

Thanks guys.

Once I have brought her out, can I then tell the lender I have just brought her out and they just take her off the mortgage ? with out a full a mortgage application, if i dont have to have any extra lending.

I have been paying the mortgage on my own for the last year, as she stopped working ?

Would they then just arrange for a simple TR1 transfer.

The Main thing is I dont want to have to pay the ERP. ?

Mrs_pbradley936

If I were in your position I would not be in a hurry - you have nothing to gain (financially that is) from getting it all sorted out asap. You might want some sort of emotional closure and to draw a line under the past and make a new start. Very understandable but let sleeping dogs lie for a while - not forever. Just until it is more advantageous to you.


If you are still on good terms you can have a solicitor draw up an agreement setting out what is to be done in the near future such as you paying her xxx within 6 months and the remainder within 2 years IF THAT SUITS YOU.


As I said it is only going to cause a problem if she insists on wanting to borrow on her own or with a new partner because then you have to sell and it will cost you the £8000.

TBagpuss

gettingitsorted1980 wrote: »

Thanks guys.

Once I have brought her out, can I then tell the lender I have just brought her out and they just take her off the mortgage ? with out a full a mortgage application, if i dont have to have any extra lending.

I have been paying the mortgage on my own for the last year, as she stopped working ?

Would they then just arrange for a simple TR1 transfer.

The Main thing is I dont want to have to pay the ERP. ?

You cannot transfer the *legal* ownership (i.e. do a TR1 and lodge it at the land registry) without the consent of the mortgage company. And you cannot simply tell them that you have transferred the ownership and assume that the lender will take her off the mortgage.

What you can do is draw up an agreement and revised declaration of trust so that she transfers her beneficial interest to you, in return for you paying her. |This would then mean that you and she still hold the legal ownership of the property, as trustees for you alone.

Once you are able to do so, you can remortgage to release her and pay off the exisiting mortgage.

Be aware that if your ex is properly advised she will probably want any payment to be based on a % of the value of the property at the time you pa her effectively you are asking her to leave her money invested in the house, so it is only fair that she has a share in any increase in value between now and when she is paid. It would also be usual to have a time limit by which you *must* pay her off and get her released from the mortgage -it may be reasonable for the deadline to be the date on which the existing deal comes to an end, so that if at that time you can't get her name off the mortgage, the house can be sold without either of you having to pay the ERP.

kingstreet

If you remortgage, the ERP will be payable.

You need to ask the lender to remove your partner from the existing mortgage under a transfer of equity.

Once the lender agrees, the matter is passed to a solicitor. The mortgage deed has to be replaced and you are not going to be submitting any TR1 forms yourself.

gettingitsorted1980

Thank you everyone that is great advice, I have an aggrement in place with a solictor, stating that I can buy her out, but what would happen if i contacted the lender and told them we have split up ? would they say the current deal is no invalid, as she has now moved out, but im paying the mortgage in full ?

densol_2

You must ask the lender if they will RELEASE her from the mortgage covenants and allow you to take over the mortgage on your own. They will run an affordability check and say yes or no. If they say yes then the current deal should be allowed the continue. Then the house will be transferred and you are the sole owner / mortgagee. You cannot just start trying to transfer a jointly owned property into your soul name that is subject to a charge - it will be rejected by the Land Registry !


You haven't mentioned values but you have to pay stamp duty on the amount you give her plus half the amount of the mortgage ( as you would have both been jointly and severally liable to the mortgage co )

So for example if you are paying her out £50k and you have a mortgage of £180k ( half is £90k) - that makes a consideration of £140k and attracts SD at 1% as about the £125k threshold