If you have a joint mortgage, this may mean applying for another mortgage in your own right which may be possible if you’ve built up sufficient equity in your joint arrangement and earn enough to pay off a new mortgage in your own name after you’ve factored in any equity that you’re entitled to. However, this isn’t always possible. Often, you’ll find that it’s the partner with the greater income who is the one who wishes to be bought out and the partner earning less might simply not be able to afford to stay in the home as they might not be able to meet the repayment of a new sole mortgage agreement on the existing property.
Why Your Equity Might be More Than You Think
When couples split up, it’s often assumed that if they are both contributing the same sum to their monthly mortgage repayments that any sale of the house is split 50-50 if they decide to go their separate ways, but that’s not necessarily the case. If an amicable agreement cannot be made, a good solicitor can often look to raise the equitable value of one partner’s share. For example, it might be that one partner has spent a considerable amount of extra money and time in making home improvements, even though the joint mortgage is split 50-50. Therefore, this additional expenditure could be taken into account in terms of the division in equity if an amicable settlement can’t be reached.
Children
The situation of the fair division of a home’s value can be made more complex if children are involved. If, for example, it’s the wife who is looking to buy out her ex-husband but doesn’t think she’ll be able to afford a mortgage in her own name, she may find that it is possible if the husband agrees that the children should stay in the family home as this can then be used to offset a percentage of child maintenance payments that would be due meaning the husband then gets less of a share of the home’s market value whilst also making it affordable for the wife and children to stay there.
Going to Court if an Agreement Cannot be Reached
If no settlement can be reached on the division of the house, a court may decide that ownership should be transferred from one person to another. However, it cannot transfer liability for the mortgage from one person to another without the lender’s consent. The problem here is that the lender may not be willing to transfer the mortgage if there are any existing arrears or if they believe that the new sole owner will be unable to keep up the repayments on their own so if they refuse to transfer the existing mortgage arrangements, the original owner or joint owners will still have to keep up repayments. Therefore, where a situation is not cut and dried or there are disagreements as to what each partner thinks they are financially entitled to in terms of transferring the home to the other partner, then you need to seek legal advice.
Once an Agreement Has Been Reached
Once a settlement has been reached, however, it’s important to check the deeds to your house. In many cases, they contain a ‘survivorship’ clause which entitles the other partner to a share of the house should one partner die, so you need to make sure that once the property is in a sole partner’s name that you have the other partner removed from the deeds or else they could still make a claim on your estate in the future, even if you have split up. Once again, sound legal advice is very important in this regard.
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