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Original poster

How does it work? ‘Buying out’ mortgage when split?

13 replies

Productivitywaning · 29/03/2021 07:06

I posted previously about my concerns in relationship with DP. I am trying to get my head straight as to what would actually happen if I decided it was over.

Can anyone explain in simple terms what happens if we split up but I don’t want to lose the house and look into keeping it myself?

I said before neither of us could afford it but in reality, I probably could afford the mortgage payments on my own if I was careful in other areas. My concern is the ‘buying out’ process. We are joint tenants. We put in basically equal deposit when we bought this place. There’s no way I could just give him back his part of the deposit in cash, I don’t have that money!

How does it actually work? I am an intelligent woman but I feel bamboozled by this process when I’ve tried to google. Would I need to find the actual cash from somewhere? The house will have increased in value too. Can I add it to the mortgage so he gets his money but I don’t have to fork out cash to him?

I would really appreciate someone explaining what they did in a similar situation! No kids. Joint tenants mortgage. Nowhere near end of fixed mortgage deal (another few years)

Is our only option to sell and move on with our respective equity/deposit money? Sad I am so attached to this house and so proud of it.

OP posts:
Needahand42 · 29/03/2021 07:11

It's technically simple to buy him out, you would just need to remortgage including the extra for his half of the deposit. The issue would be whether you can get the mortgage on your own, if you can only just afford the repayments they may not give you a new mortgage, if you don't meet affordability.

GojiberryStar · 29/03/2021 07:15

Get house valued

Ask mortgage company for figure to pay it off (there might be fees)

Do the maths to work out the equity. Minus any loans etc.

Eg house worth 400k.
Amount left to pay off mortgage 300k
Equity = 100k. The minus any shared loans.
Split equity 50k each.

Then apply for new personal mortgage either to cover existing house or to buy new place.

Original poster
Productivitywaning · 29/03/2021 07:20

@Needahand42

It's technically simple to buy him out, you would just need to remortgage including the extra for his half of the deposit. The issue would be whether you can get the mortgage on your own, if you can only just afford the repayments they may not give you a new mortgage, if you don't meet affordability.
Thanks - sorry to be dim but remortgaging including his deposit etc, does this mean I wouldn’t physically need to pay him anything out of my own pocket, that it comes from the proceeds of remortgaging essentially?
OP posts:
StephenBelafonte · 29/03/2021 07:23

That's right OP you wouldn't actually have to pay him anything you would just remortgage and pay him out from that.

First you need to go see if you can get a mortgage

Original poster
Productivitywaning · 29/03/2021 07:30

@StephenBelafonte

That's right OP you wouldn't actually have to pay him anything you would just remortgage and pay him out from that.

First you need to go see if you can get a mortgage

Got it - is there a subtle way I can do this, are we talking about me doing the usual calculator thing on bank like when you first start looking for houses?? I don’t even know how much to put in as I’m not sure of the value of the house (I can check how much is left on mortgage at this point, obviously) but I can estimate. I fear I wouldn’t be able to remortgage on my own as it’s quite an expensive house and my pay hasn’t gone up since we bought. Argh!
OP posts:
Anonapuss · 29/03/2021 07:30

Your biggest struggle here is going to be getting a mortgage to cover you.

So, think about how much you owe on your mortgage now, then think about how much the house is worth now.

So like others have said, if you owe £300,000 on a £400,000 current value home you owe him £50k.

So you need to be able to get a mortgage for £350,000 now (so you can give him £50k of that loan).

Moneysavingexpert has a mortgage affordability calculator. You put your income in and it tells you if you can get a mortgage for £350k...

Ikeameatballs · 29/03/2021 07:33

You could have a look on Zoopla to see how much other houses on your street have sold for and it will give an estimate of how much yours is worth but ime this estimate is quite broad. Otherwise you will need to speak to a couple of estate agents to get a valuation.

Anonapuss · 29/03/2021 07:33

Its worth mentioning in that scenario you wouldnt actually owe him £50k, it would probably end up being around £40k.

Theres lots to consider and take off... price for a "quick sale" is usually what buyouts are based on (not estate agents over inflated wish price), plus you have to take off legal fees and remortgaging fees.

litterbird · 29/03/2021 07:59

Dont let this put you off leaving though OP. You may have to sell and rebuy. You will fall in love with your next house too. Its just happened to a friend of mine who left his wife last year. He ADORED his marital home and was extremely reluctant to give it up as he was the main earner and was able to buy such a big and lovely house. However, he knew he had to leave the marriage and sold up. He has bought a much smaller place and his ex wife a smaller place too. He absolutely loves his new little mews cottage, a fraction of the size and is very happy and settled as is his ex.

2bazookas · 29/03/2021 08:17

@Needahand42

It's technically simple to buy him out, you would just need to remortgage including the extra for his half of the deposit. The issue would be whether you can get the mortgage on your own, if you can only just afford the repayments they may not give you a new mortgage, if you don't meet affordability.
Er, no. Assuming the house is now worth more than when they bought it, and both partners contributed equally to the deposit, the mortgage, and any imoreovements, the person being "bought out" will want half the equity, ie more than "half the deposit they paid".

Your mortgage lender will charge you fees for re-arranging the mortgage

You also need to pay a solicitor to handle the buy-out and the transfer of property title correctly.

If OP could only just manage the current mortgage by herself, it's hard to see how she could afford the above additional costs plus a bigger mortgage (current one+ buy out ).

Selling up is probably more realistic.

InkyOctopus · 29/03/2021 08:20

What’s the value of the house? (Roughly)
What’s your annual salary?
What’s the amount left on the mortgage now?

Tiger2018 · 29/03/2021 11:56

OP I know how complicated it all feels - I contacted a mortgage broker and they calculated it all for me (in nice simple language too) - might be worth doing?

harknesswitch · 29/03/2021 12:18

It's actually quite simple.

I got 3 estate agent valuations and we took the middle value.
Got a mortgage statement so we knew exactly how much the mortgage was, so we knew what the equity was.
In my case we split the equity 50/50.
I spoke to my mortgage company, worked out what I could afford to borrow and then put in an application. He was sent paperwork etc, so was I, got it all signed up

We did it through a solicitor so his half of the equity I paid to my solicitor and my solicitor paid him.

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