Paying off mortgage - Illustration of two examples

Hey guys, 
I'm trying to illustrate the effect of paying off my partners small mortgage but I'm getting a little lost in the detail. 
Here's the summary:
  • Her property is for sale, target price £210k
  • There's a mortgage on it, costing £750 pcm, with the interesting being around £112, and £48k left on the mortgage.
  • When the property is sold the capital will go to me as I'm buying out next property outright and will then transfer into both our names after this point.
Situation A:
She continues as she is, resulting capital from sale will be:
Sale price - (remaining mortgage+ early repayment charges).

Situation B:
I pay off the mortgage, she pays me what she would have paid the bank (she doesn't want to just accept the money)
Resulting capital from the sale:
Sale price - (48,000+ERCs) + 750* X Months

My thoughts were:
* Cost to my partner is identical in either case - monthly repayment and ERCs
* We'll be making more capital as a result to put into the new house as we're avoiding bank interest
* The longer the period between now and sale the more we would end up saving (e.g. if it's three months we'd save £336)
* Obviously if we sold now it makes zero difference
* By paying off the mortgage I'll be foregoing any other uses of that money - lets assume best case savings (which will be less than bank interest on the mortgage)

This seems like a sensible plan to me, but I can't help but think I have missed something! - Thoughts please people!



Comments

  • Hmmm I can see that the plan makes sense in terms of saving money but I’m not sure how I’d feel about all the switching from one partner to another & where that leaves things legally in terms of who has what stake in a property, especially if unmarried. Why is your partner not named on the new property if £150k of the equity is hers? 
    MFW 2021 #76 £5,145
    MFW 2022 #27 £5,300 
    MFW 2023 #27 £2,000
    MFW 2024 #27 £1,075 /£3,600


  • ChilliBob
    ChilliBob Posts: 2,083 Forumite
    First Anniversary First Post Name Dropper
    Hmmm I can see that the plan makes sense in terms of saving money but I’m not sure how I’d feel about all the switching from one partner to another & where that leaves things legally in terms of who has what stake in a property, especially if unmarried. Why is your partner not named on the new property if £150k of the equity is hers? 
    Yeah, I do get that, it is a bit odd. It mostly sbout stamp duty. If she was on the property (the one we had intended to buy together) but could not sell her flat for some reason then we would end up paying 'second home' stamp duty. She preferred to avoid that risk and add herself to it once the sale was completed. 
    We are unmarried (due to Covid!, we're set to be married by now, pushed to April) 
  • We’re the same, pushed back from September to July 2021! 
    MFW 2021 #76 £5,145
    MFW 2022 #27 £5,300 
    MFW 2023 #27 £2,000
    MFW 2024 #27 £1,075 /£3,600


  • ChilliBob
    ChilliBob Posts: 2,083 Forumite
    First Anniversary First Post Name Dropper
    Ha! I feel April is touch and go to be honest, we're using a school as our reception venue so only band holiday dates go choose from. Good luck! 
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