Whether you’re a married couple, an unmarried couple, or in a civil partnership, if you share your mortgage with a spouse or partner, there may come a time when you need to buy them out.
This might be due to a breakup, divorce, separation, or some other change of circumstances. Whatever the reason, buying them out of their share of the mortgage lets you carry on living in the property for as long as you want (provided you can make the repayments yourself).
Here, we explain what it means to buy out your ex, how it works, how much it might cost, and a few alternative options.
What to know about buying a partner out of a mortgage
The first thing to remember is that both people named on a joint mortgage agreement are responsible for the monthly repayments. Even if one of you has moved out of the family home, you’re both still liable as long as your names are still on the mortgage.
Keep in mind that if one of you fails to repay their share of the mortgage, it can lead to you both being chased for the money owed to your mortgage lender. This can impact your credit rating and make it more difficult to borrow money in the future.
If you want to remove your partner from the mortgage, you’ll need to go through the proper channels. Buying out your partner means, with signed permission from the other person, their name is removed from the mortgage and the property’s title deeds.
Once this happens, you’ll then take ownership of their share of the property (known as a transfer of equity), becoming solely responsible for paying the monthly mortgage payments yourself.
If you’re considering this option, it’s always a good idea to get independent legal advice.
How to buy out your partner in a mortgage
To begin the process of buying out an ex-partner in a mortgage, you’ll need to figure out how much they’re owed – and as first steps go, this can be pretty tricky.
You may wish to keep things simple and pay half of whatever equity you have in your home to your ex. But if one of you contributed more to the deposit when you bought the property, this could complicate matters. This is where it can be priceless to get help from a solicitor to negotiate with your ex (or their solicitor).
How to calculate the equity you have in your home
Equity is the value of the portion of your home you, as a couple, own outright (as opposed to the portion you’re still paying back with your mortgage).
To work out how much equity you have in your property, you’ll first need to find out how much it’s worth. A qualified chartered surveyor can carry out a property valuation to give you an accurate estimate.
Once your home has been valued, you simply subtract the amount of mortgage you owe to your lender from the value to find out how much equity you have in the property.
Example: If your property is worth £200,000 and you owe £150,000 to your lender, your equity is £50,000. So, if you’ve agreed to pay your ex 50% of the equity, you’ll need to give them £25,000 to remove them from the mortgage.
Of course, when you’re dealing with these kinds of sums, it can be pretty daunting – and it adds to an already stressful situation.
After all, not everyone has thousands of pounds of spare cash just sitting around. That’s why, usually, to buy someone out of a mortgage, you’ll need to raise the money by remortgaging.
Remortgaging to buy your partner out
If you’re unable to pay your partner off in cash, you’ll need to raise the money another way. Remortgaging is a common option for buying out a partner in a mortgage. Essentially, this means taking out a new mortgage to release some of the equity in the property.
To do this, you’ll need to show your lender that you can actually afford to take on the mortgage as a sole borrower.
When you first took out the mortgage, your lender will have taken both your and your partner’s income into consideration when deciding how much to lend you. Now you’ll be paying the mortgage on your own, there’s a chance you won’t be able to afford it, especially if your income is low. Most lenders will only lend up to 4.5 times your annual income.
If you can’t afford it, you may want to consider a guarantor mortgage. This is where someone – usually a parent or family member – agrees to cover your monthly repayments if you can't pay them for some reason.
Are there any alternative options?
If you can’t afford to buy out your partner, there are a few alternative options to consider:
- The most common is to sell your property. Once the property has sold, you can pay off your mortgage and split the equity with your partner. While this is probably the simplest solution, you should remember that selling up can take a while. This can make things difficult if you’re not getting on well with your ex-partner.
- Alternatively, consider keeping things as they are. Even if your partner’s no longer living in the property, they could continue to own it with you. If you both make sure the mortgage repayments are made each month, you can both receive a share of the property when it’s sold in the future.
- Another option is to apply for a Mesher or Martin order. These court orders ensure property stays in both partners’ names while allowing one person to keep on living there for a certain period. In the case of the Mesher order, this would be when the youngest child turns 18. This can be beneficial since it removes the need to sell your home, helping avoid the disruption and stress of moving house at this difficult time.
Read more: Dealing with your mortgage after divorce.
The bottom line
Buying your partner out of the mortgage is stressful enough – and if you’re not on good terms with your ex, or they’re reluctant to communicate with you, it can be hard to know where to turn.
With this in mind, it makes sense to seek expert advice from a financial advisor or specialist mortgage broker. They’ll be able to suggest a solution that suits your situation.
And if you’re thinking about remortgaging to buy out your partner, Habito can help. Start by plugging your numbers into our remortgaging calculator or answer a few quick questions to chat with one of our remortgage experts.