Calculating amount needed to buy out family home

[HollyWi]

Hi everyone
My husband and I have separated, I am planning on staying in our family home so want to buy him out. Things are amicable between us, and we want to avoid using solicitors for as much as we can. We are planning on doing a financial settlement and having a ‘clean break’ – we’ll share childcare 50/50 and don’t have any other assets to bring into it. Whilst we’ve lived in the house we have had an extension built which has added quite a bit to the value of the property – I paid for the vast majority of this but he paid for some of it. We’re both happy with effectively getting back what we have each put in, so does this sound like a reasonable way to calculate the amount I would pay to him? I have added up:

• The amount he originally put into the original deposit
• The amount he has paid in mortgage payments (not including interest)
• The amount he paid towards the major home improvements Then multiplied that by the percentage the house value has increased. So for example say that added up to £20,000 and the house has increased in value by 10% I would give him £22,000.
  Does that sound fair? Anything I’m missing? Thank you.

Can you get a mortgage in your own name on your income?

Yes.. that's not what I'm asking, just wanted any input on what is reasonable for the amount to buy him out.

You are making it overly complicated. Legally it’s a shared asset. What you put in is pretty irrelevant.

@LemonTT

You are making it overly complicated. Legally it’s a shared asset. What you put in is pretty irrelevant.

Agreed

I think the value of the house should be split 50/50. You have the house valued. Subtract the amount owing on the mortgage. Whatever is left you pay him half of that. Your method sounds rather bizarre to say the least.

your method is logical if that's what you are asking - would make sense if you were purely getting what you each put in, however as you are married, as other posters have said I don't think it matters who put what in. It's all shared assets therefore would start at 50:50 split unless each one of you had a greater need.

If that's what you both want to do though, you can draw up based on that as long as the court also feels it fair if you wanted to get it legally binding.

Who put what in isn’t important unless there was some kind of deed drawn up setting it all out. If not, the court would simply look at the current equity in the property.

We did this through mediation- get at least 3 valuations from different estate agents, work out the average, you each get half of that. So if you're buying him out you need to release that amount to him. What you each put in while married is not relevant.

How can anyone know what is 'fair' without knowing a lot more details. How long where you married, pensions, children etc etc.

Fair might be 50% of the equity, who knows you could be trying to screw him over. I think you should both get a lawyer.

Well if you’re both happy with the general approach you don’t needs to go lawyer route esiecuif the only asset is the house
In general terms I’d do something like this

House value 300k
Less notional selling costs 5k
Less mortgage outstanding 200k
Total equity available 95k

Less dh deposit 30k
Less your capital injection of extension 25k
Total available to split 45k

So equity is split in ratio of 54.5% to dh 45.5% to you

Therefore you’d need to pay dh
30k plus 45k x 54.5% = 54.5k

Obvs illustration only

I know the starting point for a court would be 50:50, but that doesn’t seem very fair in short marriages or where there has been a large difference in contributions. OP’s logic seems sound.

Thanks very much for all the comments. As I put in more to originally buy the house about 4 years ago and then again for the extension, I've paid about £100k more than my husband. Given it's so significantly different, it seems fairer to both of us to split it along the percentages that we've each put in. It also means I can afford to stay in the home, which we both want - if we split 50/50 then neither of us would be able to afford it, we'd have to sell and it would be a much more drawn out process (with additional costs).

Thanks @FartingNora & @millymollymoomoo - what you're saying seems very sensible!