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  • FIRST POST
    • jamint
    • By jamint 3rd Jul 18, 10:25 AM
    • 19Posts
    • 8Thanks
    jamint
    Being bought out of mortgage by my ex
    • #1
    • 3rd Jul 18, 10:25 AM
    Being bought out of mortgage by my ex 3rd Jul 18 at 10:25 AM
    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!
    Last edited by jamint; 03-07-2018 at 10:35 AM.
Page 1
    • Pixie5740
    • By Pixie5740 3rd Jul 18, 10:28 AM
    • 12,444 Posts
    • 17,688 Thanks
    Pixie5740
    • #2
    • 3rd Jul 18, 10:28 AM
    • #2
    • 3rd Jul 18, 10:28 AM
    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!
    Originally posted by jamint
    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.
    • letitbe90
    • By letitbe90 3rd Jul 18, 10:33 AM
    • 72 Posts
    • 78 Thanks
    letitbe90
    • #3
    • 3rd Jul 18, 10:33 AM
    • #3
    • 3rd Jul 18, 10:33 AM
    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.
    • Tom99
    • By Tom99 4th Jul 18, 3:57 AM
    • 2,397 Posts
    • 1,615 Thanks
    Tom99
    • #4
    • 4th Jul 18, 3:57 AM
    • #4
    • 4th Jul 18, 3:57 AM
    Surveyor's professionally are required to be within 5% of the price
    Originally posted by letitbe90

    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.
    • lookstraightahead
    • By lookstraightahead 4th Jul 18, 6:53 AM
    • 296 Posts
    • 296 Thanks
    lookstraightahead
    • #5
    • 4th Jul 18, 6:53 AM
    • #5
    • 4th Jul 18, 6:53 AM
    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.
    • getmore4less
    • By getmore4less 4th Jul 18, 7:34 AM
    • 32,413 Posts
    • 19,474 Thanks
    getmore4less
    • #6
    • 4th Jul 18, 7:34 AM
    • #6
    • 4th Jul 18, 7:34 AM
    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.
    • AnotherJoe
    • By AnotherJoe 4th Jul 18, 7:42 AM
    • 9,853 Posts
    • 11,021 Thanks
    AnotherJoe
    • #7
    • 4th Jul 18, 7:42 AM
    • #7
    • 4th Jul 18, 7:42 AM
    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.
    • saajan_12
    • By saajan_12 4th Jul 18, 1:16 PM
    • 1,311 Posts
    • 919 Thanks
    saajan_12
    • #8
    • 4th Jul 18, 1:16 PM
    • #8
    • 4th Jul 18, 1:16 PM
    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 62.5k
    Last edited by saajan_12; 04-07-2018 at 1:34 PM.
    • Jane_B
    • By Jane_B 4th Jul 18, 1:27 PM
    • 44 Posts
    • 10 Thanks
    Jane_B
    • #9
    • 4th Jul 18, 1:27 PM
    • #9
    • 4th Jul 18, 1:27 PM
    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.
    • InterestedParty2018
    • By InterestedParty2018 4th Jul 18, 2:03 PM
    • 86 Posts
    • 52 Thanks
    InterestedParty2018
    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.
    • dimbo61
    • By dimbo61 4th Jul 18, 2:10 PM
    • 9,941 Posts
    • 5,363 Thanks
    dimbo61
    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 50/50
    • sugarbabe84
    • By sugarbabe84 4th Jul 18, 2:17 PM
    • 254 Posts
    • 33 Thanks
    sugarbabe84
    50/50 split seems very reasonable
    • jamint
    • By jamint 9th Jul 18, 6:37 PM
    • 19 Posts
    • 8 Thanks
    jamint
    Thanks all for your input. I really appreciate it. See this is the thing, we do have a good relationship still. We talk quite often and it's always lovely to see her. I'm very happy she's moving on with her life and after a few wobbles I think she is to vice versa.

    I can confirm we did not have a pre-drawn agreement regarding how we'd split it in the eventuality of a sale.

    We met this weekend specifically to talk about where she is at. As it turns out, she has proposed the idea of me staying in the house for another year, and we'd look to sell it OR her buy me out this time next year. The reason for this, I should add, is that she is due to give birth in December and she doesn't want any house stresses any time soon. I'm happy with this idea as it allows me and my current girlfriend to live together for a while before deciding if we're compatible enough to buy together in a year.

    In regards to my original post this is a lot less "immediate" than I thought this time last week! But still relevant. To cut a long story short based on the meeting this weekend, she thinks that when we come to sell it, she thinks any profit we make on it should be 50/50. Obviously good from my POV. But, she thinks that on the contribution side, the amount she's paid over the years (I think she said 20,000) should be taken into consideration. So for example if she decided she wanted to buy me out and needed to pay me 80,000 to do so, she proposed the scenario where we would negotiate together to what we feel is fair and right (she mentioned maybe 70,000 as an off the cuff suggestion).

    I'm not against negotiating with her on this as I do want to do right to her, and I don't want to be greedy. But are you all saying in the unlikelihood things turned nasty and we had to go the solicitor route, could she, based on the scenario above, have any grounds for demanding more than 50/50?

    I'm purely asking this now as I just don't know how motherhood and the responsibility of having another life to look after might affect her. Hence why I'm sort of analysing this scenario just in case.
    • tlc678910
    • By tlc678910 10th Jul 18, 8:24 PM
    • 595 Posts
    • 986 Thanks
    tlc678910
    I think it would be very tough for your ex to enforce legally anything more favourable to her than a 50/50 split without anything in writing about anyagreements you made. A court process would be expensive so it would be better to agree between you.

    When calculating the division I think it is important to remember that when you pay a mortgage (say one of 25 or 30 years) usually only around half comes off the mortgage and the rest is lost as interest so I don't see why the full amount should be deducted to repay your partner. You paid the bills when you were a couple (did this include the food bill?)

    I would suggest that the split should be 50/50 for all repayments made when you were living as a couple as the division of mortgage/bills was to reflect your different earnings as a unit and your ex certainly should not reclaim fully all the payments as you contributed bills and 1/2 vanished into interest and was not paid off the mortgage. You don't get that back it's gone. At the time I imagine you saw this arrangement as a fair division in the circumstances.

    I think any different arrangement from 50:50 should focus on the time you have lived apart. If your girlfriend begins to pay rent your ex is not out of pocket and 50:50 resumes. So if it is 1.5 years of your ex paying half the mortgage while you lived there alone the negotiation should focus on that.

    By the time you consider she is equally obliged to pay the mortgage you both hold (joint and severally liable) - and she was not asking you to sell, that only 1/2 of what you have paid comes off the mortgage capital owed and half is lost as interest and she will be more than repaid what she has paid out in this time period by benefitting from this period of capital growth then I would say 50:50 or only a small amount more to her.

    You can point this out in quite a straightforward way if you offer to repay her mortgage payments for the 1 and a half years that she paid and did not live with you (on sale) but having paid all of the mortgage you would keep 100% of the capital growth for this period. She would be worse off I expect. The gain 40k each over 5 years or 8k a year is I expect more than she paid. Don't pay and don't get the gain. You don't get to both not pay the mortgage and take the capital growth.

    Tlc

    EDIT: Having looked back at your OP
    Get a RICS qualified surveyor to value in writing (you will need to pay). Tell them it is being valued for a fair split in separation.
    Also You need to review how you hold the house legally. If joint tenants I think this means if one of you dies the whole house goes to the other. If this is not what you want anymore seek advice - you maybe want someone in your family to inherit your half? If tenants in common update who gets your half if needed. Seek advice - I'm not sure if this is through your will.
    Last edited by tlc678910; 10-07-2018 at 8:51 PM.
    • Carrot007
    • By Carrot007 10th Jul 18, 8:43 PM
    • 1,384 Posts
    • 1,150 Thanks
    Carrot007
    I think it would be very tough for your ex to enforce legally anything more favourable to her than a 50/50 split without anything in writing about anyagreements you made. A court process would be expensive so it would be better to agree between you.
    Originally posted by tlc678910

    This! Court would eat all your the "profit" for both of you. Come to some agreement even if you lose 10K you are better off!
    • getmore4less
    • By getmore4less 11th Jul 18, 7:28 AM
    • 32,413 Posts
    • 19,474 Thanks
    getmore4less
    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
    Originally posted by jamint
    But, she thinks that on the contribution side, the amount she's paid over the years (I think she said 20,000) should be taken into consideration. So for example if she decided she wanted to buy me out and needed to pay me 80,000 to do so, she proposed the scenario where we would negotiate together to what we feel is fair and right (she mentioned maybe 70,000 as an off the cuff suggestion)
    Originally posted by jamint
    It will be possible to quantify that in equitable terms to get a realistic deduction.


    What may be a sensible approach is to get the basic agreement in place to delay the process as that seems to be a mutually agreeable position to be in.

    then start the discussions on how the finances should work at the time.

    A year should be long enough to come up with something that works for both of you.

    you could use the numbers now as a basis and then stick the new numbers in when the time comes.

    looks like you are going to have 2/3 periods to deal with.

    The first 3.5 years then the 1.5 years and if anything changes from now till sale.

    A value at the 3.5 year point and the cost split of mortgage bills would be useful to crunch the full equitable share process up to that point. as that won't change.
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