Buying Partner Out

3mustgetbeers

Hi,

My partner and I are splitting up and I'd like to buy her our of the house. Its a very amicable and we're just looking to split 50/50.

House Value = £185,000
Remaining on Joint Mortgage = £160,000
Equity = £25,000

My share of the equity (£12,500) would be used to form the deposit, I have no other savings.

Not entirely sure how to work this out... do I need to take out a mortgage for the full £172,500 in order to pay both parties? How does this work for my equity/deposit??

What about other costs; legal fees etc? Is it possbile for the existing lender to simply remove her name from the mortgage and release some equity which would be reflected in my monthly payments?

May well be that a buyout is not financially viable, right now I just neeed to understand what options I have

Any help greatly received

Thanks

Andy

amnblog

Andy

You need to first question whether there is enough equity to ‘pay out’ your co owner.

There is no option to remortgage at £172,500 if the value if £185,000.

Also, a remortgage valuation will be lower than the ‘market value’ in most cases so you may not get a £185,000 valuation.

Subject to affordability you may be able to take the mortgage over in your own name and release your co owner from the mortgage liability.

warby68

Yes you're right. With no savings you need a bigger mortgage in your name only to raise funds to buy her out.

It will effectively be a new mortgage, in your name only for you to 'buy' the house from you and her. As you say, your share of the any equity will stay in the deal as part of the new purchase price.

You would probably expect to negotiate a slightly lower payment to reflect the lack of selling costs to her and also to cover fairly any of the costs actually incurred.

Even assuming you will pass affordability checks, your problem is that your mortgage is already at a fairly high Loan to Value and the equity therefore low, to the extent that a difference of opinion on the property value and any fees could wipe it altogether.