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Can someone explain to me what "buying someone out of a property" actually means?

(37 Posts)
GinBunny Mon 10-Oct-16 22:40:38

Sorry if this is going to be stating the obvious but I really can't get my head around what I have to do. I've googled it and really am none the wiser.

STBXH and I bought a flat together which is currently rented out and I am going to move back in and buy him out. Approximate figures, we bought it for £160k, recently valued at £280k, outstanding mortgage of £145k. How much will it cost me to buy him out?

ImperialBlether Mon 10-Oct-16 22:42:56

I would think it involves you paying him half of the value of the property, so £140K. That's if there are no other things involved eg one of you putting in a bigger deposit, one having a bigger pension, one having the children living with them, etc.

ImperialBlether Mon 10-Oct-16 22:43:14

Then you would take on the rest of the mortgage.

GinBunny Mon 10-Oct-16 22:45:54

Wow... that's a lot of money... Jesus, I've been burying my head in the sand, where the hell do I find that sort of money from? Can I add some of it to the new mortgage do you think? But that will mean the repayments are going to be so high...

Lilacpink40 Mon 10-Oct-16 22:46:06

Have you discussed if it's a 50:50 split (no DCs)?

Did you equally contribute (lump sums and mortgage)?

Queenbean Mon 10-Oct-16 22:47:34

I don't think you'd buy him out at today's market figure otherwise he's entirely benefitting from the increase in value

I'd take the difference between what you bought it for and what you got it valued at as it being the value price.

Then take the amount you put in as a deposit, split that and give him half. Then give him half the amount the property has increased by. So then it would be the same as if you just sold it today and split the profit.

Are those figures correct though? Did you only put in £15k deposit?

UnderTheGreenwoodTree Mon 10-Oct-16 22:47:43

You take half the remaining mortgage off the current value of the property - so £140k minus half the mortgage. Then you transfer the mortgage/deeds into your name. The mortgage lender will have to agree, and you'll need a solicitor.

Bragadocia Mon 10-Oct-16 22:47:52

The equity in the house is £135k (the difference between the outstanding mortgage and what it is now worth). You pay your ex half that amount.

Queenbean Mon 10-Oct-16 22:48:49

Ie, the property has gone up by £80k so you'd give him £40k

Then if you both put in £7.5k deposit you give him his bit back

Lilacpink40 Mon 10-Oct-16 22:49:31

The flat is an asset. If it's 50:50 split you benefit from half of the money held in the flat and he takes the other half. You increase the mortgage to cover the remaining debt (incl the amount he's taken).

Alternatively, sell it and divide profit (after sales fees) 50:50.

FlowLikeAHarpoon Mon 10-Oct-16 22:51:01

Look at to this way - if you both sold that flat (for 280k), and redeemed the mortgage (145k), you would have £135k to split between you. That is what you owe him.

It doesn't matter that you are in fact keeping the flat.

FlowLikeAHarpoon Mon 10-Oct-16 22:52:09

I mean that you owe him half of the 135k, not all of it!

PlumsGalore Mon 10-Oct-16 22:55:00

Braggadocia is correct, you have to pay him half 135k so 67.5k

GinBunny Mon 10-Oct-16 22:57:02

There was no deposit as 100% mortgage at the time we bought. No DCs. Planning a 50:50 split as paid half mortgage each.
Lots of different opinions here and amounts. I feel sick, there is no way I can pay him £140k so I really hope that's not the way it works. How do I find out for sure? I know seeing a solicitor but am trying to hold off from solicitors fees as long as I can...

Queenbean Mon 10-Oct-16 22:57:43

To all those posters saying you would buy him out at today's valuation - why would you do that? It means he's entirely benefited from the increase in value to the property. Why wouldn't you split the amount the property has increased by so you both benefit equally?

The OP will be properly fucked if the value of the flat goes down and the ex partner will have completely benefited. In fact, she will be completely throwing away the time spend on her investment and the amount the property has increased in value

Canyouforgiveher Mon 10-Oct-16 22:59:39

Agree with Flow. imagine there is a sale to a third party and you get 280 for it. You clear the mortgage leaving 135k to split between the two of you. So he would get around 67k.

The one thing you should negotiate is whether the costs of the transfer - solicitors/valuation/stamp duty should come out of the "notional" sale price. So he gets half of what is left AFTER you deduct costs of doing the transfer.

You'll be negotiating a new mortgage anyway presumably so I think the first thing you should do is talk to your bank about what is realistic for you in repayments.

SortAllTheThings Mon 10-Oct-16 23:00:19

Lots of misinformation here. It's half the current equity. Get a mortgage redemption figure for the end of next month, and two valuations, and speak to a solicitor. You each currently own half of any equity. Buying him out means paying him that half. That's it.

SortAllTheThings Mon 10-Oct-16 23:00:49

Oh, minus fees BTW

Akire Mon 10-Oct-16 23:00:50

Or sell it you both have 70k to put down as deposit on another flat

HalloToJasonIsaacs Mon 10-Oct-16 23:01:31

I agree, you'd have to pay him 67.5K and then get the mortgage transferred entirely to your name, but the bank will only do that if you can convince them that you have enough income to service a 140k mortgage single handed (along with whatever additional mortgage amount you need to raise the 67.5K).

GinBunny Mon 10-Oct-16 23:01:39

Queen, I am fucked if that's how it works because I don't have £140k to buy him out with... but he has said we need to get it valued, I guess this is why?

Canyouforgiveher Mon 10-Oct-16 23:01:43

To all those posters saying you would buy him out at today's valuation - why would you do that?

Because he has a half-share in property and is entitled to sell that half share at current market value. What happens in the future to the value of the property is irrelevant to him as they have gone their separate ways.

If OP prefers, she could simply agree to put the flat on the market, each of them would realise about 65k from the sale and she could use that to buy a new flat.

LineyReborn Mon 10-Oct-16 23:02:33

Jesus. I bought my ExH out for as low as he would go to get cash in hand. (Though we had children.)

SortAllTheThings Mon 10-Oct-16 23:05:36

As well as getting a valuation look at sold prices in the area. Estate agents will always bump the price, so be realistic about the current market value.

Oh, and to the other poster - of course he's entitled to half the equity! That's how it works!

GinBunny Mon 10-Oct-16 23:07:11

Sorry, lots of x-posts. My financial advisor is content that I can get a new mortgage. Not wanting to drip feed but we are selling our house so I should get some equity from the house sale but it won't be as much as that! I think that we will be splitting costs of the sale, we haven't discussed it but it seems fair to. To me anyway!

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