Q: I would like advice on buying an ex-partner out of a home. Although the house is in his name, a court order gave me permission to stay in the home with my children and take over the mortgage, after he had accumulated arrears. We have shared equity in the property.
How would I go about buying him out? Do I need to get my name placed on the mortgage or the house deeds officially before I approach the lender? Would the house have to be remortgaged for me to do this? I am not sure how this process works.
A: You don't state if you were married, but since you don't refer to your partner as "husband" or "civil partner", I am assuming not.
Wynne Thomas, head of the private client department at solicitor Dawsons, says that as in all legal disputes, the best course is to come to an agreement with your ex-partner rather than going to court, which can be costly.
An agreement would involve deciding on a value for the house, and this is usually achieved by paying for a professional valuation, or taking the average of three valuations by local estate agents to find a figure on which you can agree. You would then deduct the amount of mortgage outstanding in order to come up with a sum representing the equity you both share in the house.
Then you would either divide this sum in half to arrive at the sum you need to pay to buy him out, or if the proportion of equity is different, apply the calculation you believe is fair.
Do be aware, though, that if you don't have records such as a written agreement about how much equity is yours – on the deeds, say, if you split the ownership from a joint tenancy to tenants-in-common – you could find it hard to verify this figure if the house has so far been registered in his name only.
Once you have decided on the value of the home and how much you need to buy him out, you will probably need a mortgage to cover both what you propose to pay him and the rest of the outstanding loan.
Mr Thomas says it is unlikely the existing mortgage would simply be transferred to you, so you would probably have to start again with a new loan, although you could ask the same lender for preferential terms.
You should in any case shop around for a good mortgage deal, and consider using a broker. The lender you choose would also want to do its own valuation of the property.
When your partner redeems his loan and you take out a new one, there may be penalties to pay for early redemption in the first case, and fees and legal costs in the second.
Naturally, your income will have to be high enough to satisfy the mortgage firm that you can take on the loan on your own.
Mr Thomas adds that if you decide to stay in the property, with your ex-partner remaining as registered owner, it could be worth your while simply registering your name on the title to the property to protect your share of the equity.
See a solicitor about how to do this; it is worth protecting your interests for the future if a sale (of your ex-partner's equity) cannot go ahead for some time.
Finally, your former partner should be aware that there could possibly be capital gains tax implications in selling out his share of the property to you, since the house would no longer be his principal private residence.
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