Remortgaging to buyout ex-partner

jetfighter

Just wondering if anyone has any experience of this situation.

My ex-partner and I own a house, which we're both currently living in.

We are in a civil partnership.

Our mortgage on the house is paid off.

The house is in joint names, and we've put equal amounts into it over the years, so in our minds we do genuinely own half the house each.

My ex is looking for a new house at the moment, and has the funds upfront (from an inheritance) to purchase another house outright (lucky her!) whereas I want to stay in our current house.

In order to give her 50% of the house's value, I will need to remortgage the property, as I don't have enough savings to buy her out.

Does anyone know how I would approach this situation? I don't know what our house is worth, but I'm guessing about £115k judging by similar house prices in the area. (The reason we are mortgage-free is that we bought the house for a piddling £38k in 2003 when the area was really run-down. Knowing what I know now, I wish we'd bought two! )

Do I get a valuation from an estate agent?
What's the most cost-effective way to remortgage?
Do I use a broker or not?
How long does this process take?

My new partner would like to be a part of this process, which I believe is called "Transfer of Equity" however I'm also unfamiliar with how this works, as I would have roughly £60k of equity and my new partner would only be bringing about £10k of equity with her from her existing house - if we both go onto the mortgage, is there any sort of way of saying the first £60k is mine, then £10k is hers, then the rest would be divided if we broke up?

I'm so clueless with this sort of thing. My ex arranged the original mortgage on the place, and I've never done it before. I have the luxury of not having to sort this out JUST yet, as my ex has the funds to buy a place (when she finds one) without a mortgage, but I will need to give her 50% of the equity and just want to be aware of how best to do this, when the time comes...

Any help much appreciated!

On_my_way

Hi

I don't have any experience of mortgages or buying houses but I didn't want to read and run.

I hope you are ok - I am sure lots of knowledgeable people on here will know exactly what you need to do.

Good luck and take care x

Ozzuk

Sounds pretty straightforward though adding the new partner at this time adds a little hassle. You shouldn't need a broker, though you could use one, just look for the best deals and choose a lender. With a LTV of under 50% (assuming your valuation is accurate) unless you have a non-standard job or very low income you should be fine.

I'm assuming your current partner will transfer the 10k to you, that forms her 'equity' in your house, you'll transfer that to your ex meaning you need to mortgage enough to raise the remaining 45-50k you are anticipating. Don't forget to split the cost of any fees and deduct that.

Not sure how you'll then protect your equity with your new partner - I guess she would be entitled to her 10k plus any new equity (assuming value rises) from the point you take out the mortgage. No idea if you entered a civil partnership if it would change that split, with 'traditional' marriages anything under 10 years is usally considered 'short' and you're normally returned to the position you started in.

Anyway, loads more experienced people here who will help but thought I'd throw a few points in there.

jetfighter

Thank you both for your replies.

Ozzuk, that's very interesting to hear that a marriage of less than 10 years comes with the protection that if you split up, you return to your original financial position. I didn't know that at all.

If my current partner and I do decide to tie the knot, which is definitely on the cards, it would be a marriage rather than a civil partnership so the law would be equal in that sense. Do you know what that particular clause of marriage is called, as I wasn't aware of it?

Re: the equity, if my current partner and I decided to do the transfer of equity and retained our own original equity in the house, would this transfer to a new house if we decided to sell my existing house and buy somewhere new together? Does anyone know?

Ozzuk

It's not a clause as such and I believe its very open to court interpretation - and can also include the time you were together before the marriage. Terms of 5, 7 and 10 years are banded around. Its also only one of the factors considered in financial assessment. But, it is a factor.

Thrugelmir

jetfighter wrote: »

is there any sort of way of saying the first £60k is mine, then £10k is hers, then the rest would be divided if we broke up?

Speak to your conveyancing solicitor regarding having a Declaration of Trust drawn up. A DoT is a legally binding agreement. This will enable you to specify exactly what you wish to do.

jetfighter

Thanks both. Really helpful!