Divorce - Transfer of Equity / Additional Borrowing

TransferofEquityQ

Hi, I'm going through a fairly amicable divorce and looking for advice on the most financially efficient route to proceed.

As part of our settlement, I will buy out my ex from our property at 50% of the equity of the latest valuation. Some key facts to assist, the property was bought for £390k and is now worth around £550k, our present mortgage deal has expired. At the new valuation we'll have equity in the property of around £250k, so I'll need to pay my other half around £125k.

How should I proceed? Instructions/Guidance on this next part is hard to come by. I do not have the liquid assets to straight up pay her the £125k so I'd like to draw down the £125k from the equity in the property. Is this considered additional borrowing? How does transfer of Equity work? Any and all pointers here would be helpful!

Caz3121

TransferofEquityQ wrote: »

As part of our settlement, I will buy out my ex from our property at 50% of the equity of the latest valuation. Some key facts to assist, the property was bought for £390k and is now worth around £550k, our present mortgage deal has expired. At the new valuation we'll have equity in the property of around £250k, so I'll need to pay my other half around £125k.

How should I proceed? Instructions/Guidance on this next part is hard to come by. I do not have the liquid assets to straight up pay her the £125k so I'd like to draw down the £125k from the equity in the property. Is this considered additional borrowing? How does transfer of Equity work? Any and all pointers here would be helpful!

If the current mortgage is in joint names you would be looking for a new mortgage in your name only to release your ex from the mortgage and pay the share of equity
current mortgage £300k, new mortgage required £425k
Without moving the mortgage into your own name alone, your ex will still be responsible and would need to be included in the application to release further borrowing

TrickyDicky101

The pertinent question is do you have income sufficient to support a mortgage of £425k? I suspect you will need at least £100k pa.

dimbo61

It not you need to sell up and pay your Ex 50% of the profit after selling expenses and mortgage repayments are taken into account

TransferofEquityQ

You're correct, I plan to remortgage to remove her from the mortgage. It's at this point I'm assuming I can draw down from the equity but this where things get unclear.

TrickyDicky101

TransferofEquityQ wrote: »

You're correct, I plan to remortgage to remove her from the mortgage. It's at this point I'm assuming I can draw down from the equity but this where things get unclear.

Yes, and to do that you need to borrow more (ie take a bigger mortgage). Do you have an income sufficient to support a £425k mortgage?

TransferofEquityQ

Thanks for the responses by the way! Most appreciated and I realise I may come across quite naive.

Luckily I do have an income sufficient to support the new mortgage amount of £425k. The part that remains unclear, when drawing down the equity, do they simply send you the money you've drawn down? How does that part actually work. I'm just trying to work out the logistics of how I would receive the money and then send it to my ex.

Contemptuous

Your solicitor would distribute the extra money as you wished, so could send it to your ex.

densol_2

You currently owe £300k. You would remortgage to £425 and instruct your solicitor to send the £125k to your ex once all the transfer papers have been signed. House and mortgage would then just be in your name.