Partner buying me out - need advice

Pbuddy123

Hi there

Just need clarification on some points. My partner is buying me out of our joint mortgage and I’m happy for her to keep the house.

Mortgage was £158,000 and we have paid off £50,000 - (£25,000 each).

Simply put, I just want back what I paid in (deposit and any payments to the mortgage). My partner does not have £25,000 on hand to give me. So I’m I right in saying that a viable option for her would be to remortgage and lend the money off the bank (assuming the bank are happy to let her remortgage). So as opposed to the outstanding mortgage being £108,000, she would remortgage for £133,000.

My main question here is - once she has remortgaged who actually gives me the £25,000? Do I get a lump sum from the bank, do I receive these payments on a monthly basis? Apologies as I have no idea what way this part works.

AdrianC

Pbuddy123 wrote: »

Mortgage was £158,000 and we have paid off £50,000 - (£25,000 each).

But how much equity do you have? What is the property worth?

And, of course, to have paid back £50k of the £158k you borrowed, you'll actually have paid a lot more than £50k, because of the interest on the entire amount borrowed. Or, perhaps more likely, you've paid £50k, but the outstanding mortgage is still a lot more than £108k, because a good chunk of that £50k has gone on interest.

Simply put, I just want back what I paid in (deposit and any payments to the mortgage).

Is that more or less than half the equity? How much deposit did you put down?

My partner does not have £25,000 on hand to give me. So I’m I right in saying that a viable option for her would be to remortgage and lend the money off the bank (assuming the bank are happy to let her remortgage). So as opposed to the outstanding mortgage being £108,000, she would remortgage for £133,000.

Yep. Of course, that's a joint mortgage of £108k vs a single-borrower mortgage of £133k, so a much bigger risk for the lender.

My main question here is - once she has remortgaged who actually gives me the £25,000? Do I get a lump sum from the bank, do I receive these payments on a monthly basis? Apologies as I have no idea what way this part works.

She pays you the lump sum. Or, most likely, her solicitor will, because the paperwork for the property ownership will also need to be done.

Pbuddy123

Yes, I have worded this incorrectly. The house value was 158,000. The mortgage is currently at 108,000. We have equity of 50,000.

You say she pays me the lump sum after she has remortgaged. How is that when she doesn’t have £25,000 on hand to give me?

AdrianC

Pbuddy123 wrote: »

Yes, I have worded this incorrectly. The house value was 158,000. The mortgage is currently at 108,000. We have equity of 50,000.

OK, that makes more sense.

You say she pays me the lump sum after she has remortgaged. How is that when she doesn’t have £25,000 on hand to give me?

Let's assume the new lender and the old lender are different.

You (jointly) owe £108k to Lender A.
She (solely) borrows £133k from Lender B.
£108k of Lender B's money goes to Lender A to clear that mortgage. The other £25k comes to you. No, it probably won't go through her actual bank account - it'll probably be all via the solicitor, assuming one's involved.

She then repays Lender B monthly, just the same as you've jointly been repaying Lender A monthly for the lump sum they paid to the person you bought the house off.

Pbuddy123

I get it now. So that 25,000 is coming from lender B, the mortgage lender. Ok thanks, for clearing that up for me, much appreciated.