Relationships can change for numerous reasons, such as breakups, divorces or separations. If this happens, you might eventually decide to buy out your partner’s share of the mortgage.
If you and your partner are joint mortgage holders, you’ll need to evaluate whether you can manage the mortgage repayments on your own. This would allow you to continue living in the property as the sole mortgage holder.
In this article, we explain the process of buying out your partner, how it works, the costs involved and other options you might have available to you.
What You Need to Know about Buying Your Partner Out of a Mortgage
The first thing you and your ex-partner need to understand is that both of you are responsible for the repayments if you are named on a joint mortgage. Even if one of you has moved out, you’re both still liable as long as both names remain on the mortgage.
This means that if one of you fails to make their share of the repayments, the lender will pursue both of you for the owed money. This can negatively impact both parties’ credit scores and make future borrowing more difficult.
To officially remove your former partner from the mortgage, you’ll need to follow the proper procedures. This involves buying out your partner and obtaining their signed permission to remove their name from the property’s title deeds.
After this process, known as a transfer of equity, you will take ownership of their share of the property and become solely responsible for repaying the mortgage.
Calculating the Cost of Buying out Your Partner
To start the process of buying out an ex-partner from a mortgage, you’ll first need to determine how much they’re owed. If you contributed different amounts for the deposit, this can complicate matters, so it’s advisable to seek assistance from a solicitor before negotiating with your ex.
If you’re splitting the equity 50/50, you can calculate your equal share as follows:
First, have your property valued by a qualified chartered surveyor to obtain an accurate assessment of its worth.
After the valuation, subtract the remaining mortgage balance from the property’s value to determine the equity. For example, if your property is valued at £300,000 and you owe £200,000 on the mortgage, your equity is £100,000. If you’re splitting the equity equally, you’ll need to pay your partner £50,000 to buy them out of the mortgage.
Handling such large sums can be daunting and add to an already stressful situation. Not everyone has tens of thousands of pounds readily available to buy someone out of a mortgage.
Buying Out Your Partner by Remortgaging
If you can’t buy out your partner with cash, you’ll need to find another way to raise the money.
One common method is remortgaging, where you take out a new mortgage to release some of the property’s equity. To do this, you’ll need to prove to the lender that you can afford the mortgage on your own.
When you initially took out the mortgage, the lender considered both your and your partner’s incomes to determine the loan amount.
Now, as a sole borrower, the lender might decide you can’t afford the mortgage. Typically, most lenders will only lend up to 4.5 times your annual income.
If you find that you can’t afford the mortgage on your own, you might consider a guarantor mortgage. This involves another person, such as a parent or family member, agreeing to cover your monthly repayments if you’re unable to pay.
Other Options Available to You
If you can’t afford to buy your partner out of the mortgage, there are a few other options available. The most common solution is to sell the property. After the sale, you can pay off the mortgage and split the remaining equity with your partner. While this is the simplest solution, selling the property can take time, which can be challenging if you and your ex-partner are not on good terms.
Another option is for both of you to continue paying the mortgage, even if one of you no longer lives in the property. By ensuring the mortgage repayments are made each month, you can both benefit from the property’s eventual sale and share the proceeds.
If children are involved, you might consider a Mesher or Martin order. These court orders allow the property to remain in both partners’ names while one person continues to live there for a defined period. For example, with a Mesher order, the property is typically retained until the youngest child turns 18.
What to Do Next
Buying your partner out of the mortgage is already a stressful endeavour. It becomes even more challenging if you’re not on good terms with your ex or if communication is difficult. In such situations, it’s natural to feel lost about what steps to take next.
In such circumstances, seeking expert advice from a specialised mortgage broker is highly recommended. They can analyse your situation and recommend tailored solutions to fit your needs.
If you’re considering remortgaging to buy out your partner, we can assist you.
You can start by inputting your details into our contact us form and arranging a call with an advisor.
