Ex buying me out. How does it all work?

kforshaw

I was with my ex for 7 years before we split in 2009.
After a few months of awkward living, we've essentially been flatmates now since then.

All bills are split 50/50 and its come to a time where I need to leave the property.

Its all very amicable (I guess up to now!) Where he is going to buy me out of the house and he's happy for me to take what I want as he's going to start afresh with his girlfriend when she moves in as I leave.

This is both of ours first purchased property.
Value is circa £75k, though how are we to ascertain this amount?
Are estate agents OK with valuing a house that is not going to go "on the books"?
Its in a lived in state (he's a hoarder) and I don't want it valued as a house that a buyer would probably run away from.

If I'm right, discounting legal fees, house is say £75k.
We owe £18k giving us joint capital of £57k.
He'd need to get a mortgage of £46.5k and the mortgage company (?) would transfer me £28.5k.
Does that sound right?

As it is an amicable arrangement, would we need solicitors to do this or would him applying for a mortgage in his sole name and paying off our joint mortgage be enough?

How would I get my name off the deeds, is there a way of doing that without involving solicitors?

Sorry...lots of questions but thanks in advance.

G_M

First off, any change to the mortgage will involve a solicitor acting for the mortgage lender. So you might as well use that solicior for the change to the Land Registry Title too.

kforshaw wrote: »

All bills are split 50/50 and its come to a time where I need to leave the property.
I assume that means
* you each put in the same equity (deposit) when you bought
* you have paid 50% of the mortgage each monthly
* you've paid 50 of all bills, repairs etc each

So there is a straight 50% split.

Value is circa £75k, though how are we to ascertain this amount?
Get estate agents round and ask for valuations. Bear in mind agents often slightly over-value, to encourage you to use them (rather than the competion) to sell the property. And/or pay a surveyor for a valuation (just as a mortgage lender does for each mortgage)
Are estate agents OK with valuing a house that is not going to go "on the books"?
No need to explain. Just ask for a valuation
Its in a lived in state (he's a hoarder) and I don't want it valued as a house that a buyer would probably run away from.
Agents and Surveyors can see passed the cr*p to the property beneath. It's their job

If I'm right, discounting legal fees, house is say £75k.
We owe £18k giving us joint capital of £57k.
less legal fees say £1000 (probobly less) = £56K
So your ex should pay you £28K
He'd need to get a mortgage of £46.5k and the mortgage company (?) would transfer me £28.5k.
No. You ex pays you. How/when is up to you guys to agree

It is likely you'll need to pay off (redem) the existing mortgage and your ex will apply for a new one.

But broadly, yes you are right.

edit: when you ex applies for his own new mortgage, the lender will do a valuation (which he'll pay for).

kforshaw

Brilliant. Thanks G_M. Pretty much as I expected.

Yes...pretty much but I'm not arguing over a minor thing.
I put up the deposit, but he bought the three piece suite and a few other bits and bobs when we bought the house of equivalent value.
As it happens, I'm taking the suite though its 10 years old now

G_M

kforshaw wrote: »

Brilliant. Thanks G_M. Pretty much as I expected.

Yes...pretty much but I'm not arguing over a minor thing.
I put up the deposit, but he bought the three piece suite and a few other bits and bobs when we bought the house of equivalent value.
As it happens, I'm taking the suite though its 10 years old now

Well, if you're taking his three piece suite, shouldn't he take your deposit? That's 10 years old too :T

kingstreet

I would say the chances of an EA marketing appraisal and a lender's surveyor's valuation corresponding are pretty minimal, so using the former as a reasonable measure of value is probably pointless.

Surveyors take comparables, the recent (last four months) sold prices of similar property in the vicinity (within 0.5 miles), so it may be worth looking here to see on what a surveyor will be able to base his valuation;-

http://www.rightmove.co.uk/house-prices.html

If you feel it worthwhile, you might also wish to consider investing £20 in a desktop valuation by HomeTrack;-

http://www.hometrack.co.uk/

but ultimately, the surveyor appointed by the lender will determine the value, agreeing or disagreeing with the estimated value entered on the mortgage application. The person completing the mortgage application therefore has control, as a lower estimated value entered is likely to see the surveyor agree and this would result in a reduced payment to the party leaving ownership.

On the legal side, many lender offer "free legals" for remortgages, but the cost of the additional work for a transfer of equity will be payable, perhaps around £300.

Alternatively, an "own solicitor" route is possible, where the lender pays a £250 cashback instead and this can often result in better service and control over the process.

The abridged process for a transfer of equity is as follows;-

remaining party completes and submits remortgage application

application processed and valuation done

mortgage offer issued

solicitor prepares transfer documents and probably recommends leaving party obtains optional independent legal advice

solicitor arranges completion and receives remortgage funds, agreeing to pay settlement to leaving party in return for completed transfer forms

remortgage and transfer of equity completed, funds dispersed and land registry updated.

TBagpuss

In terms of the value, you and he are free to agree on whatever you think is a fair valuation for the house. You can get two of three agents round, tell them you are considering selling, and ask them for their views. They will recommend a specific price to market at, ask them what they think it would realistically achieve (and if necessary, mention that you will of course be decluttering and ensuring it is well presented, if you do decide to sell!)

Look on zoopla/rightmove for recent sold prices for similar houses in your area.

If you and he cannot agree on a figure then you would need to agree on a valuer, and get a formal valuation, which you would then pay for jointly.

If you are happy not to seek any adjustment for your deposit, then the normal calcualtion would be to work out what the equity would be if you sold the hosue, so take into account the cost of redeeming the mortgage and of any legal and agents fees if you sold (it's common to allow 2 - 2.5% for these)

You will need to specify that your ex must get you released from the mortgage - this needs the consent of the lender, or alternatively, for him to re-mortgage to clear the old mortgage and pay you out.

On your figures:

Value 75,000
mortgage 18,000
notional costs of sale at 2.5% 1,875
net equity therefore 55,125

50% = £27,562.

So your partner would clear the exisiting mortgage, he would pay the costs of the transfer and would pay you £27,562.

Of course, you could ignore the notional costs of sale / propose that he pays those in lieu of you claiming anything back for your deposit.

The moretgage co. won;t pay you the lump sum direct so you would need to make sure that the conveyancers give you an undertaking to pay that amount completion of the transfer.

Effectively he is buying the property from you + him