Buy Out An Ex
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Unless you own a house by yourself, you might face the prospect of having to buy someone – usually an ex partner – out of your property.
What does it mean to buy someone out of a house?
Being bought out of a property means giving up your legal rights of ownership, usually in exchange for some money.
This often happens following a divorce, separation, or split: one party will move out, and the other will stay in the property. The one who stays will remortgage to take their ex off the title deeds, and borrow extra to pay them off.
I want to buy my ex out – how much do I need to give them?
If you and your partner have a mortgage together and haven’t decided how to divide things in case of a breakup, it’s pretty straightforward to figure out how to buy them out of the house.
Owning the house equally, as joint tenants, means you each own 50% of the equity in it. To work out how much equity there is, you need to know both the value of the house and the amount of any outstanding mortgage. Subtract the mortgage balance from the value of the house, and that’s the total equity. Divide by two to get your equal shares.
If you’re tenants in common, however, it means you each own a specific share in the house. This would have been set up legally when you bought it. It might be a 60/40 or 70/30 split, for example. In this case, you still subtract the mortgage balance from the value of the house to get the total amount of equity. Then, divide that figure by 100, and multiply it by the percentage share your ex has, e.g. if they have a 30% share, times it by 30.
You might be able to agree something completely different, but if you’re struggling to work things out, this is typically what a solicitor might suggest.
How do I know if I can afford to buy my ex out?
The easiest way to find out is to speak to an experienced mortgage broker.
Lots of brokers aren’t tied to one particular bank or building society; instead, they work with dozens of lenders. This will save you a lot of time as the broker can quickly check your borrowing capacity with their panel of lenders, instead of you having to approach each one individually.
Every lender has a different calculator that they use, as well as different criteria that determines whether or not you are eligible. If your case doesn’t fit with one lender, it might fit with another. For example, Lender A might not accept maintenance payments unless you’ve been receiving them for at least a year, whereas Lender B could only need to see it going in the bank for the last three months.
If you can’t borrow enough on your income alone, you could consider a guarantor mortgage or Joint Borrower Sole Proprietor. That’s where a family member goes on the mortgage with you, but gains no legal rights over your property. There are options available if family can gift or loan you the money, too.
The worst case scenario is having to sell. You would then have to move in with family or friends, rent, or look to buy somewhere cheaper. Read our page on buying a house after a divorce or separation for more information.
Aside from being able to borrow what you need, it’s also worth considering whether you can afford the running costs of the property on your sole income, especially if your ex was contributing to bills before. Review your bills and spending habits. Use our budget planner to see where your money is going each month, and if there is scope to cut back anywhere if needed.
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What mortgage options are there if I need to buy my ex out?
There are three main types of mortgage used to buy someone out of a property.
Further advance
The first is a further advance. This involves applying to your current lender for more money, and informing them that your ex needs to come off the original mortgage. Both the original mortgage and the new borrowing needs to be affordable on your income alone, and you’ll need to pass a credit check. This is usually the first option considered if you are tied into a deal with penalties to pay for leaving early, or if you have a low rate you don’t want to lose.
Remortgage
The second option is a remortgage. This is an entirely new mortgage with a different lender. It will replace your existing mortgage and give you the extra funds needed to pay your ex off. Again, it is subject to affordability and credit checks.
Second charge lending
Finally, there is second charge lending. This lets you keep your original mortgage, if your current lender says you can, and involves applying to a second charge lender for the extra money you need. It’s basically a second mortgage on the same house, usually at higher rates.
Please note that we do not arrange second charge mortgages here at The Mortgage Store Chorley. We would refer to a third party instead.
My ex stopped paying the mortgage – does this impact me?
If the mortgage was in both of your names, it’s a joint liability. That means you are both equally responsible for ensuring it is paid. That’s true even if the bank account payments are made from is just in one name.
Missed payments will show on both of your credit files. Missed mortgage payments are among the most serious credit mishaps, and can have an impact on your ability to borrow for several years. Read our page on bad credit mortgages to find out more.
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What costs do I need to factor in when buying my ex out?
The main cost you need to budget for is the legal work.
Some remortgage deals come with standard legal fees covered by the lender. However, removing someone from the title deeds – known as a transfer of equity – does not count as ‘standard’ legal work, so there will be an additional cost to you for doing this.
There may also be a fee to pay to Land Registry for processing the change to the property’s title. Check whether or not this is included in any quotes you get.
The exact cost will depend on which solicitors you use. Please note, if you opt for the lender to pay for the standard legal work, you don’t get to choose the law firm.
Your mortgage may come with fees such as a product fee or valuation fee. A mortgage illustration should be provided to you before any application is submitted. The illustration will detail any fees payable and when they are due.
If you are coming out of a deal early, there may be a substantial early repayment charge to pay to your existing lender.
You should also review your insurance policies. Any policies held jointly with your ex may no longer be relevant. Some policies can come with a separation benefit, which makes it easier to make changes. Check your policy documents to see if you have this.
How can The Mortgage Store Chorley help me buy out my ex?
Taking over sole responsibility for the mortgage after a divorce or separation can be daunting. At The Mortgage Store Chorley, we understand the emotional upheaval you’re going through, and we’re here to offer friendly advice as well as listen to anything you need to get off your chest.
We’ll guide you through refinancing your mortgage to get the money you need to buy out your ex. We’ll also explain all the legal and money stuff in simple terms, so you feel confident about your decisions. With our help, you can smoothly take over ownership and move forward with peace of mind.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
