Equity entitlement advice

SimonKM

Hello,

So very recently my long term partner decided to leave. Cancelled her side of the bills and left. The issue being that we took out a joint mortgage 2 years ago on the property we were living in. It looks like the solution is going to be me taking over the property/mortgage on my own meaning I will have to buy her out using some of the equity in the property, correct? My question is about the amount she will receive, is it always a 50% split? I paid the entire £13,000 deposit myself, as well as every single monthly mortgage payment myself, which amounts to roughly £11,000 so far. She put a bit of money towards legal fees, and has paid utilities bills. But I presume these payments are irrelevant in terms of the mortgage itself? I am in no way looking for revenge or to put anyone in a difficult financial position. But do I have to bite the bullet and give her 50% of the equity to buy her out, or do I have genuine case to have this settled in a slightly fairer way?

I will appreciate any advice,
Thanks.

kingstreet

Did you buy tenants in common with an unequal equity split and/or have a deed of trust drawn up at purchase?

SimonKM

No, neither.

Tom99

[FONT=Verdana, sans-serif]I expect legally a 50/50 split is what should happen since you have not documented any different but that does not stop you putting what you would regard as a fair proposal to her.[/FONT]
[FONT=Verdana, sans-serif]It is probably in her interest to be taken off the mortgage so you have some bargaining chips there.[/FONT]

SimonKM

Hello again,

I have another question with regards to this. When it comes to buying my ex out of the mortgage using the equity in the property, where does the deposit come into things? Will that be included in the settlement amount and therefore added onto the outstanding mortgage balance in order to pay her off? Therefore leaving me with a higher mortgage balance than we originally started on.

We bought the property for £130,000, I put in the £13,000 deposit, leaving us with a starting mortgage balance of £117,000. We currently owe £114,000 on the mortage, and estimate the property would sell for £140,000. So that is an estimated £26,000 in equity right? But thats including the deposit too. So I would have to give her half the equity (£13,000), which would be added onto the mortgage balance, leaving me with £127,000 to pay off. Which is way more than the initial amount. Or am I getting this all wrong? Would the depoit not be included in the buy out amount?

Thanks for any help.

Tom99

[FONT=Verdana, sans-serif]You have not documented if but if you had a fair settlement might look like this:

[/FONT] [FONT=Verdana, sans-serif]Your £13,000 bought 10% of the house so you get the 1st 10% of its now value ie £14,000

[/FONT] [FONT=Verdana, sans-serif]So £140k-£14k=£126k

[/FONT] [FONT=Verdana, sans-serif]Then deduct the mortgage

[/FONT] [FONT=Verdana, sans-serif]£126k-£114k=£12k

[/FONT] [FONT=Verdana, sans-serif]That amount you split 50/50 so you will buy out your partner for £6k

[/FONT] [FONT=Verdana, sans-serif]So you will need to come up with £6k in addition to taking over the £114k mortgage.[/FONT]

SimonKM

There was no pre-arranged agreement prior to taking out the mortgage, if that's what you are asking?

Is a fair settlement something I can push for still? I have absolutely no idea where I stand on this legally. Seeing as the deposit was my money and I have been making the mortgage payments.

getmore4less

I paid the entire £13,000 deposit myself, as well as every single monthly mortgage payment myself,

unless you have has some other agreement on the side like they pay the bills then they have in reality not being building up any equity.

You are in a negotiation between 0% and 50% of the equity including that paid off the mortgage.

Tom identified a fair way(post:6) if you were sharing the mortgage payment.

Tom99

SimonKM wrote: »

There was no pre-arranged agreement prior to taking out the mortgage, if that's what you are asking?

Is a fair settlement something I can push for still? I have absolutely no idea where I stand on this legally. Seeing as the deposit was my money and I have been making the mortgage payments.

[FONT=Verdana, sans-serif]I am not sure about the legal situation of you forcing your partner to sell or her forcing you to buy but hopefully you are a long way from that and can agree something amicably.

[/FONT] [FONT=Verdana, sans-serif]From your situation if you can't agree on what you think is a fair settlement you can just pay the mortgage and wait but your partner will have trouble getting a mortgage on another property whilst tied in to the existing mortgage and will have to pay 3% extra stamp duty if they are still an owner of your joint house. So there may be some pressure on them to agree what is fair.

Do you earn enough to support the mortgage on your own?
[/FONT]

getmore4less

agreements don't have to be written did you have any discussion on what would happen going forward with you paying the full mortgage