Buy Out The Mortgage From Your Ex

The house you buy jointly with your partner is likely to be the biggest investment you make in your life. That means it can also become your biggest asset. But what happens if the two of you split up and you want to buy out your ex and keep the house?

There are a number of factors involved, not the least of which, with the credit crunch so tight, is the ability to actually obtain a mortgage, which is likely to be a major concern for the foreseeable future. Putting that aside, however, there are still several things to consider.

Equity And Your Partner

The longer you own your house and keep up mortgage repayments, the greater the equity you have in your house – the more of it you actually own. But equity can work both for you and against you. It’s not necessarily a 50-50 split between you and your ex. If one of you put a lot more money into home improvements, for instance, that person will have a greater amount of equity, and that has to be taken into consideration in the buyout price.

An Amicable Agreement For Buying Out Your Partner

Obviously, the best and simplest solution is if you can reach a calm understanding between the two of you about one buying out the other. There’s a strong chance that one party won’t want to stay in the house, anyway.

But however amicable things are, when it comes to buying out a partner, everything needs to be legally signed and sealed, which means you’ll need to take legal advice and have things handled by a solicitor.

No matter how it’s resolved, whether agreeably or in court, the partner who ends up with the house will need to change the deeds, making sure the other partner isn’t listed as the survivor on those deeds.

When Children Are Involved In Buying Out A Partner

If a couple has children and the female wants to stay in the house, buying the mortgage out from her partner, the situation can become a lot more complex, especially if her income means she’s unlikely to obtain a mortgage on her own income.

In that situation, as long as both parties are agreeable, then her partner accepts a lower equity in the house, offsetting that value against the maintenance payments he would have to make. This gives the woman a much larger stake, lessening the amount she’d need in a mortgage and making it more feasible. However, this needs the full agreement of both parties, and all arrangements should be made through a solicitor.

Where There’s No Agreement About Buying Out A Partner

At times it can be impossible to come to an agreement between the two parties about buying out a partner. In that instance it will end up in court, which has the power to decide for one partner or the other. However, and this is vital, it can’t make that decision without the consent of the mortgage lender. So, if the lender believes the new owner wouldn’t be able to keep up repayments, it might refuse the arrangement, and the same might well apply if the mortgage is in arrears. In that case, the court’s hands are tied, and the joint ownership remains in place, leaving both partners responsible, which means selling the house can be the only course.