being bought out of a property

carls955

Hiya just need abit of advice. Long story short i bought a property with an ex 3 yrs ago. We split up in December and i moved out of the property but carried on paying my half of the mortgage. The property then went on the market for sale in January and has been lowered in price twice already due to no viewings. The property is up for remortgaging at the end of May. We paid 303k which was overpriced on reflection. My ex put in the whole deposit of 30K.  With the property market at a standstill with the corona virus at the moment my ex has put to me that he is willing to buy me out with the figures being
 we have a remaining balance of £259,767 with £43,232.95 paid over the 3 yrs, minus his deposit makes £12,932 with my share being £6,466. I'm quite happy to be bought out at this stage as one, i don't want to keep paying a mortgage on something i'm not living in, two there's no knowing of when it will sell in this market now and for how much and three obviously don't want to been tied in further with the remortgaging. Sorry for the long post just hoping to get clarification the amounts sound right and also would i need a solicitor for this so then lowering further the £6,466 i'm untitled too?

greatcrested

carls955 said:

......We paid 303k ......
 we have a remaining balance of £259,767 with £43,232.95 paid over the 3 yrs,

Your figures don't add up. Have you actually received a redemption figure from the lender?
 You seem to be assuming that every penny you have paid the lender has reduced the mortage balance by a penny. It does not work that way!

carls955

the figure is from our mortgage lender

AdrianC

Never mind how much has been paid over the three years. That's irrelevant.

Subtract the amount the lender are owed from whatever you agree to be the current value of the property. That's how much equity there is.

Now you need to decide how to split that equity. What proportion can you agree is fair?

carls955

AdrianC the amount the lender is owed is £259,767 and we are currently struggling to sell it at 300k which is 3k lower than we paid for it.

AdrianC

Don't care what you paid for it. That's as irrelevant as how much nobody wants to pay for it now.

How much are the two of you AGREEING BETWEEN YOU that it's worth?

As for the "amount the lender is owed" - have they given you that figure, or are you simply subtracting how much you've paid from how much you borrowed?

greatcrested

greatcrested said:

carls955 said:

......We paid 303k ......
 we have a remaining balance of £259,767 with £43,232.95 paid over the 3 yrs,

Your figures don't add up. Have you actually received a redemption figure from the lender?
 You seem to be assuming that every penny you have paid the lender has reduced the mortage balance by a penny. It does not work that way!

Ah! Apologies. So (rounding up)

you paid £303k

your deposit was £13K

so you borrowed £290k

your monthly payments total 43k

of which £30.3k  was interest

leaving £259.7k outstanding

TBagpuss

OK, so the current net equity (assuming a value of £300K) is £40,300. That may fall if house values fall further.

If you had no declaration of trust then the starting point is that you are each entitled to 50% of that, if you have a declaration of trust, or if you and your ex agree that they should keep their original deposit, then ex gets £30K back and the balance of £10,300 is split equally. If you and your ex agree that the value is £303K then the net equity is £42,300 and if you agree to them having the whole of their £30K then you would each be entitled to £6,650.

That said, if he is living there it would equally be reasonable to agree that he will be responsible for the whole of the mortgage =- effectively paying your 'half' as rent to you for the use of your share of the house, and for you to take the house off the market for now and agree to sell it (or agree to him buying you out ) once the market recovers. 
If you are happy with the offer he is making then he will need to instruct a solicitor to deal with the transfer and will need to remortgage to pay off the existing mortgage (effectively taking your name off) You may need a solicitor to check the paperwork for you and deal with the ID / verification rules 

steampowered

This is how I calculate your share:

- Value of the property = £303,000
- Minus £259,767 of mortgage debt = £43,233 of equity
- Your ex has paid £51,616 into the property (i.e. £30k deposit, plus £21,616 of mortgage payments). This is 70.5% of the total.
- You have paid £21,616 into the property via your mortgage payments. This is 29.5% of the total.
- Therefore, you should get 29.5% of the equity. This is £12,753.

My calculation differs slightly from TBagpuss because I've treated all of the money put into the property equally, rather than saying the deposit comes off first. I don't understand where you get £6,466 from.

The figure will change if the value of the property changes. Your lender will need a valuation for your ex's remortgage, so you could take that figure.

You will need a solicitor to do all of this, because the mortgage lender will have to agree for you to be released from the mortgage and to the land registry being updated. This should all  be done at the same time as the mortgage.