Buying partner out of house HELP!

njh7

Hi everyone, just looking to get a bit of input if anyone's been through something similar or knows anything that could help. Trying to get my head around this but ill throw the numbers and explain below;

HOUSE PRICE: £149,500
MORTGAGE: £112,425
DEPOSIT (5%): £7,500 (£5,500 MYSELF & £2000 MY PARTNER)
H2B GOV LOAN: £30,000.
JOINT TENANTS: 50% EACH
MONTHLY MORTGAGE PAYMENT: £479

Phew, anyway my partner is threatening because she is down as 50% she can take a lot more money off me than what we're trying to agree. I'm trying to be as fair as possible through this process as I will be the one keeping the house (I've checked with the mortgage lender etc & all is good!).

Am I right in thinking it's not what she's put in that is owed to her
(£240 X 9PAYMENTS =£2160)

But actually whatever we have taken off the mortgage?
£109,724 REMAINING SO (£2,699.87 / 2 = £1,349.93) ?

She's expecting half of everything we have bought together, fridge, furniture etc etc.. Just pretty scared right now as she's asked for £8K and I don't feel like going through solicitors just yet as keeping costs down is a MUST. I know eventually I may have to..

Any Q's or input just fire away, would appreciate any comments.

Thanks

da_rule

I may be missing it, so I apologise if I am, but what is the house currently worth, as she’ll be entitled to a share of the equity too potentially. Also, the H2B loan value is based on the property value now rather than when you purchased it.

njh7

It's currently worth the same as purchase, £149,500.

Mutton_Geoff

If there is no increment in capital value and the mortgage balance has been reduced by £2,700 by equal payments from both of you, then I would say a fair sum would be a refund of their share of debt reduction, ie £1,350, plus their deposit back, £2,000 plus a fair value for the items they contributed to that you will be keeping. How much did you spend together on furnishing/white goods etc? Divide that up, add to the £3,350 then that's your number.


The mortgage payments have been mostly covering interest on the debt, they are not a savings scheme. The big issue buying your partner out is if you are able to borrow the total sum outstanding to buy them out? It's not as simple as agreeing a sum and then "taking over" the mortgage without informing the bank.


Do you have the, say £5k, that you need to buy them out or will you need to add that to the loan? You may well have trouble remortgaging on your own unless you have good earnings to cover the new single LTV.

TBagpuss

You look at what you would each get if the hosue was sold today.

So on your figures

Sale price £149,500
less
mortgage £109,724
HTB Loan £ 30,000
Net equity therefore £ 9,776

50% of which is £4,888

There is an argument for also taking off an amount for costs of selling the house - what the estate agents and legal costs would be if you sold.
Unless you had a formal agreement in place you don't get back the deposits you each paid, even though these were unequal. You can of course seek to negotiate that you do, in which case you'd argue that she should get £3,138

(total equity is £9,776, less £7,500 deposit gives you £2,276. So she would get 50% of £2,276 (£1,138) plus the £2,000 she paid towards the deposit)

In terms of home contents, usually the best way to deal with that is to split the actual furniture etc - but if you are effectively buying her share of the home contents they would usually be valued at their current (i.e. second hand) value, not what you paid for them in the first place.

njh7

What she's saying is that it would just be 50% of the total equity. Doesn't matter than I put in more? Is that how it works?!

AdrianC

njh7 wrote: »

What she's saying is that it would just be 50% of the total equity. Doesn't matter than I put in more? Is that how it works?!

It works however two grown adults can agree between them on it working.

On the most surface of levels, it doesn't much matter who put in more - you each agreed to be exactly 50% joint owners. So why shouldn't you each walk out with the same 50% share?

The other way of looking at it is, of course, that you put in £5,500, she put in £2,000 and you jointly paid off £2,700 of the borrowed money. So that's £6,850 vs £3,350 = pretty damn close to 2:1.

Can you bear to speak civilly to each other for long enough to come up with a sensible compromise between you, somewhere between those two? Do you have a joint friend you both trust, who could act as a [STRIKE]referee[/STRIKE] mediator?

getmore4less

njh7 wrote: »

What she's saying is that it would just be 50% of the total equity. Doesn't matter than I put in more? Is that how it works?!

It does if you did not put something in place at the start to say different or an agreement now that you get the deposits back.

don' forget all the other buying costs need including if you do get that agreement.

One approach to middle ground is whatever calculation is used for you to buy them out you use the same for them to buy you out.

Or you sell up and both take the hit on costs.

The stuff you bought is second hand value.