How do you buy someone out?

[planAplanB]

If my STBEXH buys me out so he own the house, what does this actually mean? Currently both our names are on the mortgage. He earns enough to pay the monthly mortgage with shake his salary leftover. If he buys me out to have only his name on the mortgage, what do I actually get? I really don't understand.

So it doesn’t matter if he can afford to pay the mortgage, he needs to be able to get a mortgage for the full amount in his own name, so his affordability will be checked.

Essentially he will get his own mortgage for the entire value, and you get your equity out. Typically 50% of the equity in the property.

He won't just be paying the mortgage amount that it is at the moment, he'll have to borrow extra which he then gives to you which releases your equity (share).

You'll need to get a few valuations on the house, decide between you what is an acceptable "sale" value and then agree how much equity you both need. If you can't decide between you, you'll need solicitors then a judgment if agreement can't be reached. Definitely get a clean break order through a solicitor.

Housing children/your current ability to work/disabilities etc will all be taken into account. Starting point is 50/50 but it can then go either way.

He gives you half of the current value so will have to borrow more
You get a lump sum , he keeps the house

No, he does not give half of the current value of the house, he gives half of the EQUITY in the house

@Mrsttcno1 I stand corrected .. I always presumed they gave you half of the total value .

No wonder he wants to keep it on then if you have paid quite a bit of the mortgage

In the simplest form, if your property has a value of £200k for example, and you have £100k of equity, £100k of mortgage, he applies to take on the full £100k mortgage as a stand alone applicant, and you split the £100k equity so you get £50k in your bank account and walk away from the property.

Yeah it isn’t half of the total value (unless mortgage free of course), it’s half of whatever equity is in the house as the rest is covered by the mortgage.

If he buys you out, factor in that if you then use the money to buy a new property you will have to pay stamp duty. So make sure you get extra £ in the settlement to cover that too.

Wait wait wait! But what about the money that's been put in? Is that just lost?

Example.
House is valued (get at least 3 estate agent valuations ) at £400K
Mortgage is £250K.
Equity is then £150K
You would get half of that so £75 K
He would need to be able to get a mortgage in his name for £325K. This is the original £250k plus the £75k that has gone to you. His £75K would be the deposit and he would need a mortgage in his name for the rest

It is why buy outs often fail. The salary needs to be large enough to get the new mortgage

The money that’s been put in is what builds the equity. Each month you pay towards your mortgage, you are reducing the total debt, and building the equity pot. It doesn’t go missing, unless you are in negative equity where the value of the property has reduced since you purchased it.

The husband will now take on the debt (mortgage) entirely alone. The issue a lot of people have is they are unable to take on the debt as a single applicant, even though they can cover the monthly mortgage payment alone.

He doesn't take on the mortgage debt alone.
He needs to take out a new mortage to reflect the amount after half of the equity has been paid out.

It can also become quite contentious in agreeing on the valuation, when you have differing motivations.

It’s in the interest of the person remaining in the home to go for the lowest valuation, where the person walking away will obviously favour a higher valuation to maximise their share.

Even with 3 estate agent valuations and going for the middle ground, it often gets messy/unpleasant.

Sorry but this is wrong.

He had no legal requirement to pay you anything more than 50% of the equity.

The fact that you then might have to pay stamp duty and other costs when buying your next property is immaterial.

But I didn't say he was legally required to contribute to any future stamp duty. I said she should factor it in the settlement. The transfer of the marital property to him will likely be pursuant to a court order and therefore stamp duty free. Any property she subsequently buys won't be. So she should sure she negotiates some extra £ in the settlement to help cover that.

He has to get a new mortgage in his name only which includes the amount he will be paying you.Then he pays you your share.
This needs to be done properly via a solicitor as if you were buying a house which essentially he is.
Don't do this without a solicitor.

Be aware that if you’re married the share of equity may be different ( in either direction) to 50%.

and of course you’ll need to understand any others assets if there are any not just the house in isolation

This.

He may not need to remortgage enough to raise your half of the equity if there are other assets to be divided up.

Thanks @BleachedJumper as soon as I typed it I thought I've missed something. That's what I get for asking a question tired and hungover. Back to bed.

I've reread some of these posts - thank you so much