Buying out Ex partner share of the property

smithj82

Hi folks

i need your advice on the finances of buying my partner/ or her buying me out out of our property we own but cant figure out how much I would need to pay to settle this.

The house was bought for £88,500 of which I paid a £28k deposit and have subsequently paid £15k in overpayments totalling £43k. She has paid no deposit and no overpayments.
We both pay equally for the share of the mortgage payments, Currently £530 a month.

We have recently had the property valued at £120k and there is currently £20k left on the mortage to pay.

She has stated she wants to give me my money back that I paid in from the deposit and overpayments £43k

Do I have my calculations right here?

property worth £120k - £20k (what is currently left on the mortgage) =100k

100k/2 = £50k each

as she owes me £43k do i add £50k onto this totalling £93k?
If i am buying her out but she owes me £43k do I then have to pay her £7k 50k what her share is minus 43k what she currently owes me?

Im not sure if this is correct? Can anyone clarify as its driving me mad

PDF

I wouldn't be happy with that if I was her. .

I'd expect you to take your 43k from the 100k equity then split the remaining 57k down the middle. Seems fairer to me but I'm sure everyone else has their own ideas including you.

At the end of the day it is what you and your ex are happy with rather tgan what strangers on a forum suggest.

Good luck with it all.

smithj82

I'm just wanting to know what the correct calculations are that's all.surely 100-43 and then sharing that is incorrect as she paid nothing extra into it.eg if we had both paid 20k for a deposit up front then 120-20-40/2 Would be correct as it was all equal?

Subtracting 43 from 100 Would mean she would have contributed half of 43.I'm confused.

Thrugelmir

smithj82 wrote: »

I'm just wanting to know what the correct calculations are that's all.surely 100-43 and then sharing that is incorrect as she paid nothing extra into it.eg if we had both paid 20k for a deposit up front then 120-20-40/2 Would be correct as it was all equal?

Subtracting 43 from 100 Would mean she would have contributed half of 43.I'm confused.

Unless there's a legal agreement specifying the division there's no correct calculation. You need your ex partner to be cooperative. I would go with PDF's suggestion. Why extend the pain of the break up. The sooner matters are resolved you can both move on with your lives. That's priceless.

getmore4less

If you want to do a full equitable calculation need a full timeline of payments.


another approach.

but take the basic £88500 £28k deposit mortgage £60500

you overpay £15k, £20k left that's £25500 paid off through normal mortgage then there is the £40k uplift in value

that approach is you need to find £35k to buy her out

Your calculation is flawed even if you do the get you money back approach.

(100-43)/2 = £28.5k.

Frogletina

smithj82 wrote: »

I'm just wanting to know what the correct calculations are that's all.surely 100-43 and then sharing that is incorrect as she paid nothing extra into it.eg if we had both paid 20k for a deposit up front then 120-20-40/2 Would be correct as it was all equal?

Subtracting 43 from 100 Would mean she would have contributed half of 43.I'm confused.

Once the money is divided up in the way that has been suggested to you, your share will be £43,000 more than your partner. As you have been paying equally to the mortgage I would suggest the balance of the equity should be divided between you.

Your calculations would give you £86,000 more than your partner despite her paying half of the mortgage.


Looking at this query reminded me of how I shared the equity with my partner when we split to clarify that I worked mine out correctly as the figures are very similar in that the house was valued at £120,000 and I had paid off 50% of the original value (your deposit and payments came to almost 50% of the original value).

The difference there was that although I put the deposit down and made overpayments, I only paid the outstanding mortgage on the balance on what I owed ( my deposit was 20%, so I paid 3/8 of the mortgage) When I paid my half of the balance I didn't pay any more towards the mortgage and my partner continued to pay the full mortgage which was now for the other 50%.

When the house was valued I had 50% of the value of the property which was what I had paid for, he had the remainder of the equity.

This I feel was the correct decision.

Had I been paying full mortgage payments, I would have expected to have received half the value of the property plus a 50% share in the remaining equity.

smithj82

hmmm this is all getting confusing. I think I need to see a financial advisor to discuss this. I dont want either of us being ripped off as we are parting in good terms. we both just want what is fair for the pair of us.

Thanks for your replies though, appreciate it

smithj82

getmore4less wrote: »

If you want to do a full equitable calculation need a full timeline of payments.


another approach.

but take the basic £88500 £28k deposit mortgage £60500

you overpay £15k, £20k left that's £25500 paid off through normal mortgage then there is the £40k uplift in value

that approach is you need to find £35k to buy her out

Your calculation is flawed even if you do the get you money back approach.

(100-43)/2 = £28.5k.

could you explain the £40k uplift? im confused where you got that figure from and the £35k to buy her out
the house is currently worth £120k and was bought at £88500 so uplift in value should be £31500?

sorry about this.very confusing for me.

kingstreet

smithj82 wrote: »

I think I need to see a financial advisor to discuss this

... and you'll be told there is no "book answer" if you didn't do a deed of trust at the outset. That would have set the terms of a split if in profit, break-even, loss etc.

Without that, you have to figure out between you what is fair to you both.

getmore4less

Ok £31K uplift

As I said if you want a proper analysis equitable version it needs a lot more detail.

The get you money back is just the same as an interest free loan to the other person.

lets look at the equitable way.

starting point

£88500 £28k deposit £60500 mortgage paid 50-50

ownership is £58250:£30250 at the start.

Every time you make an overpayment the equitable ownership changes unless you change the debt.

gets very messy if you don't rebalance by adjust the payments on the mortgage

another option is rebalance based on a linear increase in value.

I can explain further

The key if you what deal did you go into the joint purchase if you had one.

getmore4less

kingstreet wrote: »

... and you'll be told there is no "book answer" if you didn't do a deed of trust at the outset. That would have set the terms of a split if in profit, break-even, loss etc.

Without that, you have to figure out between you what is fair to you both.

and quite a lot that come on here having done one(deed) realise too late it was done wrong because they failed to understand how to do equitable ownership.