Buying ex out

[thetrees]

I feel really confused and stupid not to understand this.

If there is £200k equity and £100k mortgage and I give ex £100k and take on the mortgage, am I giving him £150k or £100k?

If we were selling the house we would pay off the mortgage with the proceeds of the sale. In this scenario, I'm taking my equity and choosing to take on a mortgage to buy our house instead of another one.

Am I missing something?

I take it that you're giving him £100k.

You continue to pay down the mortgage and once that's paid you have a house worth £300k. (or whatever it's worth at that time).

You’re giving him 100k because you have 200k of equity. Why would it be 150k?

I assume by “take on the mortgage” you mean having the mortgage fully in your name and it being signed over legally.

I should add I know very little so I would t base much on my comment 😂

Equity includes deduction for the mortgage so you are giving him £100k which is half the equity.

So house is worth £300k
Less mortgage = equity = £200k cash split between two is £100k each

If there is £200k equity and £100k mortgage and I give ex £100k and take on the mortgage, am I giving him £150k or £100k?

Can I just check ? So The house is worth 300 , you have 100 left to pay, and you own it 50:50?

Imagine you sold it to someone else. You get 300, you pay off the mortgage of 100 and you have 200 left, so that’s 100 each.

So when you buy out your ex, he will be in the same position as he would have been if you have both sold it to a third party.

He will have 100k. You will a house worth 300 and a mortgage of 200. So you have equity of 100.

Made up numbers for ease of understanding but yes.

It's actually, he's entitled to half the equity, I pay him that £100k from another source and take on the mortgage which remains unchanged.

Does that make sense?

Is he still getting a total value of £100k? Or more

If you get the house on deeds in your sole name and the mortgage is transferred into your sole name and you give him £100k yes he's had his share of the house.

Jointly you only own 2/3rds as the other third belongs to the bank!!

The extra 100k which is mortgaged belongs to the bank. To own it one day, you are committing to paying back 100k plus whatever interest will be accrued on that over the remainder of the loan, and taking on the risk that the house isn't worth that when it is finally yours. If he is arguing you should also be paying half of the mortgaged amount to him without him taking on the debt and risk, then he can go whistle.

It's actually, he's entitled to half the equity, I pay him that £100k from another source and take on the mortgage which remains unchanged

Yes. Or more usually people remortgage as they don’t have a spare £100k lying around. Or a kind person who will gift it to them.

Of course, that only works if you can get and pay for a mortgage of 200k. That’s the dilemma that many mothers have - they have given up their career to benefit his and seriously damaged their earning power. Plus they have the kids most of the time so have the majority of even all of the childcare costs.

But they only get 50% of the marital assets.

So they have the most people to house and care for and the least money.

He has his well paid job ( that she facilitated for him ), only himself to house most of the time and no childcare costs.

And even then, so many of them still grudge paying the bare minimum of child support. But that’s a whole other thread......

I'm currently going through this process. Other things to consider are that if you were to sell, there would be solicitors and agents fees involved, into the thousands. Additionally as I am also keeping the house, I am paying a very good but not cheap financial advisor to sort this out for me - why should I pay all that alone for a decision made jointly? I will be deducting 50% of incurred fees from my ex's settlement value.

Also the value that a mortgage valuation comes to may be significantly at odds to what a high street estate agent may have valued it at. EA will quote high to sell high and get commission. Mortgage valuers will value lower, to protect the bank's asset. This is the figure that matters. Although lower equity means less money to your ex.

Also whether the lender will actually give you the mortgage alone based on your earnings and affordability. My advice would be get a decent financial advisor and don't approach lenders directly.

Alternatively if the loan to value ratio is good and your income will clearly cover the mortgage I would suggest doing it yourself. I contacted the lenders direct and the transfer of deeds etc was done by conveyancers - it was quite easy.

However we did agree on fair value between us based on EA value and the mortgage company didn't value due to relatively low loan to value.
It was very amicable which is the big disclaimer with this approach.