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jamint
Posts: 30 Forumite
Hi all,
Basically I'm just wanting a bit of advice as the title suggests, my ex-gf might be buying me out of my mortgage, but the financials are a bit messy and I'm not entirely sure where I stand. Thankfully our relationship is (currently!) very warm/civil so hoping it won't get messy. But still, feel like I need to get clarification where possible as I've never owned/sold a property before.
We bought the place 5 years ago for £185k. 1.5 years ago we amicably broke up and she moved out to live with her new boyfriend shortly after. I stayed in the house.
Deposit wise, we put in £39k - around £22k of that was from me, plus I paid the solicitors (£3k), and the remaining £17k was from her.
Mortgage payment-wise it's a bit messy. For the first 3.5 years of owning the house, she was paying all the mortgage and I paid all of the council tax/bills - she earned considerably more than me at that time (I was finishing my studies and working part-time) and this was our arrangement. For the last 1.5 years (basically since she moved out) we 50/50'd the mortgage, but as I was living in the house I continued to pay everything else.
We still have £135k outstanding to pay on the mortgage, so have paid off roughly £10k. The house today is roughly worth about £260k, so about an £80k increase.
My questions are this:
- My ex and I are on good terms, as I say, and she's keen to insist that despite mortgage payments, that was our agreement at the time and that she's happy to split it 50-50 (I supported her a lot emotionally during the 3.5 years which I guess is what she is deeming as unquantifiable). What I don't know, is this 50-50 split including the deposit, or is the deposit somehow separate to everything else? I.E. Should I ask for my share back when it comes to the £ exchange?
- Basically I don't know how the "buying out" process works - does it include deposits, how does it work - does my ex/her bf just hand me a lump sum based on the maths and then I sign over the house to them? Is it substantially less stressful/expensive than just selling it to someone else, etc?
- My ex wants to get the house valued but has told me it has to be the bank with whom we currently have the mortgage with who needs to do it. I feel like we should get several EAs out to value the house, and don't really get why the bank we currently have the mortgage should do it. Are my ex and her bf restricted to only getting a mortgage from our current provider?
I only feel this is an issue as the last time we got the mortgage renewed, the bank (imo) undervalued the house, as well as of course they have an interest it in being valued lower and therefore more affordable for them
- How quickly/easily can it take for someone to be "bought out". Ex has mentioned that they think it could be done by October, but bearing in mind they won't be getting it viewed/valued until mid late July this seems a bit optimistic?
Sorry for all the info and way too much, I'm just a bit out of my depth and don't know how any of it works!
Basically I'm just wanting a bit of advice as the title suggests, my ex-gf might be buying me out of my mortgage, but the financials are a bit messy and I'm not entirely sure where I stand. Thankfully our relationship is (currently!) very warm/civil so hoping it won't get messy. But still, feel like I need to get clarification where possible as I've never owned/sold a property before.
We bought the place 5 years ago for £185k. 1.5 years ago we amicably broke up and she moved out to live with her new boyfriend shortly after. I stayed in the house.
Deposit wise, we put in £39k - around £22k of that was from me, plus I paid the solicitors (£3k), and the remaining £17k was from her.
Mortgage payment-wise it's a bit messy. For the first 3.5 years of owning the house, she was paying all the mortgage and I paid all of the council tax/bills - she earned considerably more than me at that time (I was finishing my studies and working part-time) and this was our arrangement. For the last 1.5 years (basically since she moved out) we 50/50'd the mortgage, but as I was living in the house I continued to pay everything else.
We still have £135k outstanding to pay on the mortgage, so have paid off roughly £10k. The house today is roughly worth about £260k, so about an £80k increase.
My questions are this:
- My ex and I are on good terms, as I say, and she's keen to insist that despite mortgage payments, that was our agreement at the time and that she's happy to split it 50-50 (I supported her a lot emotionally during the 3.5 years which I guess is what she is deeming as unquantifiable). What I don't know, is this 50-50 split including the deposit, or is the deposit somehow separate to everything else? I.E. Should I ask for my share back when it comes to the £ exchange?
- Basically I don't know how the "buying out" process works - does it include deposits, how does it work - does my ex/her bf just hand me a lump sum based on the maths and then I sign over the house to them? Is it substantially less stressful/expensive than just selling it to someone else, etc?
- My ex wants to get the house valued but has told me it has to be the bank with whom we currently have the mortgage with who needs to do it. I feel like we should get several EAs out to value the house, and don't really get why the bank we currently have the mortgage should do it. Are my ex and her bf restricted to only getting a mortgage from our current provider?
I only feel this is an issue as the last time we got the mortgage renewed, the bank (imo) undervalued the house, as well as of course they have an interest it in being valued lower and therefore more affordable for them
- How quickly/easily can it take for someone to be "bought out". Ex has mentioned that they think it could be done by October, but bearing in mind they won't be getting it viewed/valued until mid late July this seems a bit optimistic?
Sorry for all the info and way too much, I'm just a bit out of my depth and don't know how any of it works!
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Comments
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Hi all,
Basically I'm just wanting a bit of advice as the title suggests, my ex-gf might be buying me out of my mortgage, but the financials are a bit messy and I'm not entirely sure where I stand. Thankfully our relationship is (currently!) very warm/civil so hoping it won't get messy. But still, feel like I need to get clarification where possible as I've never owned/sold a property before.
We bought the place 5 years ago for £185k. 1.5 years ago we amicably broke up and she moved out to live with her new boyfriend shortly after.
Deposit wise, we put in £39k - around £22k of that was from me, plus I paid the solicitors, and the remaining £17k was from her.
Mortgage payment-wise it's a bit messy. For the first 3.5 years of owning the house, she was paying all the mortgage and I paid all of the council tax/bills - she earned considerably more than me at that time (I was finishing my studies and working part-time) and this was our arrangement. For the last 1.5 years (basically since she moved out) we 50/50'd the mortgage, but as I was living in the house I continued to pay everything else.
We still have £135k outstanding to pay on the mortgage, so have paid off roughly £10k. The house today is roughly worth about £260k, so about an £80k increase.
My questions are this:
- My ex and I are on good terms, as I say, and she's keen to insist that despite mortgage payments, that was our agreement at the time and that she's happy to split it 50-50 (I supported her a lot emotionally during the 3.5 years which I guess is what she is deeming as unquantifiable). What I don't know, is this 50-50 split including the deposit, or is the deposit somehow separate to everything else? I.E. Should I ask for my share back when it comes to the £ exchange?
- Basically I don't know how the "buying out" process works - does it include deposits, how does it work - does my ex/her bf just hand me a lump sum based on the maths and then I sign over the house to them? Is it substantially less stressful/expensive than just selling it to someone else, etc?
- My ex wants to get the house valued and then visit a financial advisor to see how much her/her bf need to buy me out. I feel like we should get several EAs out to value the house, and don't really get why the bank we currently have the mortgage should do it. Are my ex and her bf restricted to only getting a mortgage from our current provider?
I only feel this is an issue as the last time we got the mortgage renewed, the bank (imo) undervalued the house, as well as of course they have an interest it in being valued lower and therefore more affordable for them
- How quickly/easily can it take for someone to be "bought out". Ex has mentioned that they think it could be done by October, but bearing in mind they won't be getting it viewed/valued until mid late July this seems a bit optimistic?
Sorry for all the info and way too much, I'm just a bit out of my depth and don't know how any of it works!
What does the Deed of Trust you set up when you bought the place say will happen in the event of a split? You did get a Deed of Trust drawn up....didn't you?
If not then legally it's a straight 50/50 split of the equity after the mortgage has been repaid although you and your ex are free to negotiate some other split.0 -
I would trust a bank/surveyor's valuation over an estate agent every day of the week. That is if you care about accuracy. Surveyor's professionally are required to be within 5% of the price (and they usually are probably within 2-3%), estate agents can give whatever valuation and they won't be held to account.0
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Surveyor's professionally are required to be within 5% of the price
[FONT=Verdana, sans-serif]Where did you get that nonsense from? What is acceptable valuation accuracy will depend on the type of property being valued, its uniqueness and the availability of suitable comparables.[/FONT]0 -
I bought my ex out based on a valuation and split it 50/50. This was before the last crash so he did very nicely out of it and I ended up in negative equity.
The market is so fickle at the moment - if you are prepared to go the route of less stress I would go 50/50 and be done - you might end up better off than her in the long run.0 -
there are a number of ways to view this if you did not have an agreement in place at the start
Starting point, you are in for £25k her £17k and the mortgage £146k
now you owe around £135k on a £260k value
50:50 gets you £62.5k
If you went 50:50 on the mortgage then there are 2 basic options
equity based you owned (£25k+£73k) £98k 52% then you would be due (0.52*£260k)-(0.5*£135k) = £67.7k
get your money back split the rest 50:50 you get £66.5k
if she thinks the agreement was 50:50 was it? or
do you think the agreement was something else?
did you document any agreement?
If you go for a full equitable split based on contributions then you need to have an idea what the contributions were for that first 3.5 years where she paid the mortgage and you paid the bills before the mortgage went 50:50.
Assuming the mortgage was more than the bills then you are reducing the highest £67.7k towards the £62.5k.
you also risk that she may have been paying significantly more so equity she owed was more than the difference in your deposits(and fee) making your share less than 50%.
if when there are numbers on the table for value and split you have the amount you both would get,
if you are not happy with those numbers then your counter is to offer to buy her out with bigger numbers so both shares go up. until you are happy.
First is get a lender to agree to the new borrowing level for the purchaser.0 -
I suggest keeping it simple even though other metrics might be arguably slightly fairer.
So, deduct your deposit and buying fees.
You get that back.
Then split the rest 50/50.0 -
Usually I say no reason to mix finances and people should get back based on what they put in, but you can't (fairly) only count your overcontributions and not ex's.
* You put in £8k more initially
* Ex put in £? more through mortgage payments for 3.5yrs
* Ex put in £?? more by letting you stay in their part of the property rent free, while paying rent elsewhere.
All in, sounds like you were mixing finances.. you paid more upfront, ex repaid you by paying more than their fair share monthly. I would split the total equity 50/50.
Equity = 260k - 135k = 125k, so your share would be £62.5k.
Ex&partner need to raise a new mortgage to pay off the current mortgage (135k) plus your equity (62.5k) for a total of £197.5k.
Then on/after the day of transfer
- original mortgage redeemed & they remove the charge on property
- deeds transferred to ex&partner's name
- new mortgage lender places a charge on property
- You get cash (bank transfer) for your £62.5k0 -
How much were the mortgage payments your Ex took care of for 2.5 years, as if they weren't super low, it looks pretty even so just split 50/50.
If you didn't get a deed of trust drawn up when buying legally its going to be 50/50 anyway, so no point even thinking about it if you didn't bother to sort that out before buying.0 -
Without a pre-drawn agreement stating how your finances are to be managed (during and after) a relationship, it will all be down to guesswork and negotiation. In my opinion anyway.
There seems to be a fair and reasonable split of finances (broadly) over the years, and unless there is a huge (provable) fluctuation in favour of one over the other, then I would suggest a 50/50 split of the equity.
My math would be:
- Obtain formal valuation that you both agree on.
- Deduct remaining mortgage
- Deduct any costs relating to the sale/transfer of interest.
- The balance of this is the £-value to be shared 50/50.
Now you need to establish:
- Can your ex raise sufficient funds to pay you out your 50% share? Or will you end up with a charge on the property instead? (I am guessing you would prefer to be paid out?)
- Will your ex be able to continue the mortgage on her own? The mortgage company wont simply "take your name of the mortgage". They will do their own due-diligence to ascertain if she can afford the property.
My advice.... keep communicating with your ex and don't get greedy. This combo will ensure a smooth transition.0 -
A mortgage of £146,000 for three and a half years is a Whole lot more than £8,000 extra you put in.
Not sure how much your council tax was or other bills but I would keep things simple 50/50 of the equity once the current mortgage is cleared.
Your EX has built up a relationship with the lender and may find it cheaper and easier to remortgage with them.
You walk away without selling costs so stick to 50/500
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