Property buyout after separation: is my offer reasonable? Help!

[ThisQuickOliveCat]

Looking for advice on a property buyout after separation in England.

My ex and I jointly own our home. Mortgage is about £220k and realistic value is £245k–£250k. If we sell, there is also a £6,600 early repayment charge plus estate agent/legal fees.

He originally wanted about £15k based on half the gross equity. I offered £10k based more on what he would actually receive after sale costs. My parents are lending me that £10k because I don’t have it in savings, and I then added an unexpected £1,200 bonus I got as that’s literally all I could give him, so we have now basically agreed £11,200.

The issue is what comes with it.

There is around £4,900 that I say he still owes me under a previous repayment arrangement. I have the repayment schedule in writing and his response at the time saying “looks ok”. He now says it was later verbally written off, which I dispute.

He will accept £11,200 if I:
write off the £4,900 completely; and
pay him extra cash for the second-hand value of higher-value household items he is leaving behind.

My position is that £11,200 is the property buyout, and the disputed £4,900 should instead be used as a baseline when dividing the household items, so we agree second-hand values for what stays and what he takes rather than me finding even more cash.

We are now considering mediation.The only reason I am trying so hard not to sell is that this is our 2-year-old son’s main home, I have roughly 75% of his care, and the house is on the same street as his grandparents. My ex has already signed a tenancy elsewhere and says he will move once the finances are agreed.

I think he’s being completely unreasonable here, but I know know what else to do to get through to him. The next steps would either be to go through mediation, which I’m certain won’t work as he is so strong about the 15K or take this to court which will cost us both so much more than the disputed equity. If we choose to put the house on the market, we’d have to agree on asking price which we can’t agree to either at the moment.

what do I do…

Hey @ThisQuickOliveCat sorry to hear about your situation.

the reality is you haven’t really got any equity in your house so it’s hard to accurately agree a settlement figure based on what you’ve said.

if you think the value is £250k, it’s probably only £230k in the open market. Take away the ERC and agent fees then you are left with pretty much no equity.

if you want to stay in the house, which is understandable, with four Lilly base rate rises over the next 12 months, mortgage rates will almost certainly soar to over 6%. With a 3% ERC I would guess you have less than 2 years left on your current mortgage term. If your payments went up by £300 a month, could you afford to stay in the house?

in regards to the AP if the house comes to the market, you don’t need to agree on the price or set the price, that’s an agent’s job.

Personally, I don’t think you should buy him out, given the above, as you could very well end up in negative equity in the not to distant future.

oh BTW, I’m an Estate Agent so the above has come from first hand experience!

good luck

Are you married? If so have you considered pensions?

Any chance of him agreeing to sorting out the house once the Early Repayment charge expires? If you buy him out can you afford to live there on just your salary going foward? Is he the father and have you agreed child maintenance? If the house is significantly larger than you need for you and your son I.e a 3 bed family house you might be better off selling and buying a smaller more manageable property.

Hi OP, in your shoes I would seriously consider selling the house and finding a new place for you and your son. Otherwise it seems to me that you are likely to be financially disadvantaging yourself (given the housing market and your ex's stated position) and handling over far too much money.

While I appreciate you may have already thought this through, but have you checked your affordability to take on the mortgage to get him off? I think you may trigger the ERC anyway to get the house in your sole name, otherwise you have to keep him on the mortgage which isn’t great for him, then technically he still needs to contribute towards the mortgage as opposed to a clean break.

Is he on a high salary that £15k doesn’t mean much to him so that’s why he is happy to go to court? Or would he actually miss it? I would be tempted to call his bluff if you suspect it is the latter, as I imagine he knows you have sentimental ties to the property (being close to grandparents) so may be trying to put the squeeze on you.

I would also get estate agents round to value the property on a realistic basis with recent comparables. If you have to spent £200 or so to get it, at least you will show that you are acting reasonably in terms of values and now just finger in the air guessing.