We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Thoughts appreciated about a break up and mortgage scenario
Options
Comments
-
MWT said:housebuyer143 said:
So they would get their 16% back of the deposit they paid plus 50% of £55k. But bare in mind that the estate agent value might be too high and it might not be realistic.1 -
MWT said:Tarama said:Housebuyer123 you ask what the declaration of trust spilt was - it 50/50 as far as I know.
What to me is unclear is what the remaining sum is that the person being bought out is entitled to - taking account of the portion of the property paid for with the deposit and paying the mortgage for 3 1/2 years.
I do hope I have expressed this all clearly here.If the declaration of trust specifies 50/50 then the calculation is clear, they are entitled to 50% of the equity in the property.... (current value - remaining mortgage balance).If you had wanted a more equitable calculation taking into consideration the imbalance in the deposit funding then it should have been written into the declaration of trust...If this is an amicable split and there is room for negotiation then my approach sets out how to factor in the deposit issue, but they are entitled to a full 50% share if they wish to stick to the declaration of trust...
So is this the correct way to work this out. Party 1 is buying party 2 out of the house. The DOT is 50/50 after return of each party's deposit.
So equity = 370,000 (current valuation) - 206,000 (current mortgage amount) = 164,000
Party 1 return of deposit 164,000 minus 67200 = 96,800
Party 2 return of deposit 96,800 minus 12,800 = 84,000
£84,000 divided by 2 - 42,000
Party 2 12,800 + 42,000 = £54,800 to buy party 2 out.
Is this correct?
Thank you all again.
0 -
Tarama said:MWT said:Tarama said:Housebuyer123 you ask what the declaration of trust spilt was - it 50/50 as far as I know.
What to me is unclear is what the remaining sum is that the person being bought out is entitled to - taking account of the portion of the property paid for with the deposit and paying the mortgage for 3 1/2 years.
I do hope I have expressed this all clearly here.If the declaration of trust specifies 50/50 then the calculation is clear, they are entitled to 50% of the equity in the property.... (current value - remaining mortgage balance).If you had wanted a more equitable calculation taking into consideration the imbalance in the deposit funding then it should have been written into the declaration of trust...If this is an amicable split and there is room for negotiation then my approach sets out how to factor in the deposit issue, but they are entitled to a full 50% share if they wish to stick to the declaration of trust...
So is this the correct way to work this out. Party 1 is buying party 2 out of the house. The DOT is 50/50 after return of each party's deposit.
So equity = 370,000 (current valuation) - 206,000 (current mortgage amount) = 164,000
Party 1 return of deposit 164,000 minus 67200 = 96,800
Party 2 return of deposit 96,800 minus 12,800 = 84,000
£84,000 divided by 2 - 42,000
Party 2 12,800 + 42,000 = £54,800 to buy party 2 out.
Is this correct?
Thank you all again.
0 -
housebuyer143 said:Tarama said:MWT said:Tarama said:Housebuyer123 you ask what the declaration of trust spilt was - it 50/50 as far as I know.
What to me is unclear is what the remaining sum is that the person being bought out is entitled to - taking account of the portion of the property paid for with the deposit and paying the mortgage for 3 1/2 years.
I do hope I have expressed this all clearly here.If the declaration of trust specifies 50/50 then the calculation is clear, they are entitled to 50% of the equity in the property.... (current value - remaining mortgage balance).If you had wanted a more equitable calculation taking into consideration the imbalance in the deposit funding then it should have been written into the declaration of trust...If this is an amicable split and there is room for negotiation then my approach sets out how to factor in the deposit issue, but they are entitled to a full 50% share if they wish to stick to the declaration of trust...
So is this the correct way to work this out. Party 1 is buying party 2 out of the house. The DOT is 50/50 after return of each party's deposit.
So equity = 370,000 (current valuation) - 206,000 (current mortgage amount) = 164,000
Party 1 return of deposit 164,000 minus 67200 = 96,800
Party 2 return of deposit 96,800 minus 12,800 = 84,000
£84,000 divided by 2 - 42,000
Party 2 12,800 + 42,000 = £54,800 to buy party 2 out.
Is this correct?
Thank you all again.
this all makes sense now.0 -
Tarama said:MWT said:Tarama said:Housebuyer123 you ask what the declaration of trust spilt was - it 50/50 as far as I know.
What to me is unclear is what the remaining sum is that the person being bought out is entitled to - taking account of the portion of the property paid for with the deposit and paying the mortgage for 3 1/2 years.
I do hope I have expressed this all clearly here.If the declaration of trust specifies 50/50 then the calculation is clear, they are entitled to 50% of the equity in the property.... (current value - remaining mortgage balance).If you had wanted a more equitable calculation taking into consideration the imbalance in the deposit funding then it should have been written into the declaration of trust...If this is an amicable split and there is room for negotiation then my approach sets out how to factor in the deposit issue, but they are entitled to a full 50% share if they wish to stick to the declaration of trust...
Party 2 return of deposit 96,800 minus 12,800 = 84,000
£84,000 divided by 2 - 42,000
Party 2 12,800 + 42,000 = £54,800 to buy party 2 out.
Is this correct?0 -
MWT said:Tarama said:MWT said:Tarama said:Housebuyer123 you ask what the declaration of trust spilt was - it 50/50 as far as I know.
What to me is unclear is what the remaining sum is that the person being bought out is entitled to - taking account of the portion of the property paid for with the deposit and paying the mortgage for 3 1/2 years.
I do hope I have expressed this all clearly here.If the declaration of trust specifies 50/50 then the calculation is clear, they are entitled to 50% of the equity in the property.... (current value - remaining mortgage balance).If you had wanted a more equitable calculation taking into consideration the imbalance in the deposit funding then it should have been written into the declaration of trust...If this is an amicable split and there is room for negotiation then my approach sets out how to factor in the deposit issue, but they are entitled to a full 50% share if they wish to stick to the declaration of trust...
Party 2 return of deposit 96,800 minus 12,800 = 84,000
£84,000 divided by 2 - 42,000
Party 2 12,800 + 42,000 = £54,800 to buy party 2 out.
Is this correct?0 -
MWT - there will be 3 valuations - to ensure fairness here. Thank you all for your responses. Most helpful. I agree with Hoenir - the person leaving will incur considerable expense because of this unfortunate situation. Never mind the emotional toil for both parties. Again thank you all.0
-
Hello
Returning to this thread hoping to seek some more view points.
Affordability test not met to take on the mortage solely - appointment with mortgage lenders mortgage adviser this week to discuss taking on the mortgage solely. Not sure how to approach this - any tips about this would be welcomed.
Solicitor involved has suggested there may be Stamp Duty Land Tax implications (SDLT) - due to taking on ex partner's share of the mortgage, which apparentally is charged as consideration for Stamp Duty purposes!! The solicitor has to prepare and file an SDLT return to HMRC.
many thanks in anticipation.0 -
New to this thread but understand the situation (I personally went through the same thing about 4 years ago).
Likewise I was just off meeting affordability to take on the sole mortgage + further advance (which was used to buy out the other person) - in the end, I combined forces with my new-ish partner and we bought out the house together (she put a trivial amount in, it was our combined affordability that was important) . I wouldn't personally recommend doing this, however we had said we wanted to buy a house together in the future anyway, and there seemed little sense wasting thousands of pounds in moving and solicitors, when I technically already owned a house. We set up a deed of trust so the existing equity was protected in the event of a break up... fast forward and we're married with kids so it all worked out OK in the end.
Sorry, I digressed a bit. How far from affordability are they? Typically lenders will lend 4.5x annual gross income? How far is that to the amount needed to take on the existing mortgage+further advance? If it's close I'd be tempted to haggle on the price (after all, you're both saving on estate agent costs by not selling), if you're a million miles off I can't see that you have any other choice but to sell.Know what you don't0 -
Exodi said:New to this thread but understand the situation (I personally went through the same thing about 4 years ago).
Likewise I was just off meeting affordability to take on the sole mortgage + further advance (which was used to buy out the other person) - in the end, I combined forces with my new-ish partner and we bought out the house together (she put a trivial amount in, it was our combined affordability that was important) . I wouldn't personally recommend doing this, however we had said we wanted to buy a house together in the future anyway, and there seemed little sense wasting thousands of pounds in moving and solicitors, when I technically already owned a house. We set up a deed of trust so the existing equity was protected in the event of a break up... fast forward and we're married with kids so it all worked out OK in the end.
Sorry, I digressed a bit. How far from affordability are they? Typically lenders will lend 4.5x annual gross income? How far is that to the amount needed to take on the existing mortgage+further advance? If it's close I'd be tempted to haggle on the price (after all, you're both saving on estate agent costs by not selling), if you're a million miles off I can't see that you have any other choice but to sell.
thank you for your swift reply. Sorry to hear about your situation, but clearly you have had a positive outcome.
A few further points about this situation:
- the individual here can afford to buy out the second person, so they do not need to borrow this money on the mortgage.
- the afordability shortfall is - can borrow £192K and the current mortgage amount is £206K - so £14 shortfall. Parents can supply £ this if allowed to do so.
- Parents would be able to step in as a buyer/guanantor etc - to provide more funds - if this is permitted. They have income to do this. They are in their early 60s so this may mean they are non eligible here. Unsure about these points.
Thanks0
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 351K Banking & Borrowing
- 253.1K Reduce Debt & Boost Income
- 453.6K Spending & Discounts
- 244K Work, Benefits & Business
- 598.8K Mortgages, Homes & Bills
- 176.9K Life & Family
- 257.3K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards