Buying Someone Out of a House

Are you going through a separation or divorce and thinking of buying your ex out of the mortgage? Or perhaps you and your siblings have inherited the family home and you want to keep the house for yourself.

You may be relieved to hear that the process doesn’t have to be complicated. With the help of this article and personalised advice from mortgage experts, it’s possible to find a mortgage buyout solution that works for everyone involved.

What is a mortgage buyout?

A mortgage buyout happens when someone who owns a property with at least one other person pays the other owner’s share of the property’s equity.

So if you and your ex-partner own a house together and you’d like to live there by yourself, you’ll usually need to buy them out of the mortgage before their name is taken off the mortgage and removed from the deeds. The same goes for if you own a house with a friend, parent or sibling.

How long does it take?

Buying someone out of a house typically takes 4-12 weeks. Delays can arise from valuation disputes, financing approval, or legal paperwork. The timeline depends on quickly reaching a financial agreement and completing legal formalities. This often requires clear communication and a mediator for negotiations.

Working with a mortgage broker with previous experience in arranging mortgage buyouts can be a smart move – they’ll already have a working knowledge of the process from start to finish. They’ll know exactly what to do to speed the process along and make your life as easy as possible.

Did you know… You could access 30% more of the mortgage market with a broker on your side.

How to remortgage to buy someone out of a house

To buy someone out of a house involves one party paying the other for their share. This process requires a property valuation, agreement on the buyout amount, updating property titles and possibly a new mortgage or remortgage to fund it. Legal advice is key, and you need to consider potential tax implications.

Your first step should be to find a specialist remortgage broker as this will save you a lot of time and boost your chances of getting approved at the best terms available.

Using our free broker-matching service you can speak straight away to the right broker by simply making an enquiry online. They’ll be able to help with:

• Gathering all the necessary paperwork required for this type of remortgage
• Downloading and optimising your credit reports
• Finding the right lender and securing the best deal for you

Jump ahead to the next section to find out how to calculate the cost of your buyout or head to our remortgage guide to learn more about what the refinancing process entails.

Calculating the cost of a mortgage buyout

To calculate buying someone out of a mortgage, first determine the property’s market value, then subtract the mortgage balance to find the equity. Agree on each owner’s equity percentage. The buyout amount is the departing owner’s percentage of the total equity.

If you’re buying out an ex-partner, you’ll usually need to pay them half of the equity that you share in the home. However, things can get a bit more complicated if you’ve contributed very different amounts towards the deposit or mortgage repayments.

To calculate how much equity is in the home, you’ll need to start by assessing how much the home is worth. You can usually get a free valuation from an estate agent. Many estate agents will send you their valuation within hours. For a more formal valuation, you’ll need the help of a chartered surveyor. These will usually require payment (typically £200-£1,000) and may take anywhere from a few days to a number of weeks.

Once you have your valuation, deduct the amount you have outstanding on your mortgage.

So if, for example, your home is worth £300,000 and you still owe the lender £100,000, this means you have £200,000 equity in the property. To buy out your ex, you’d typically need to pay them £100,000 unless they were willing to accept another amount.

Once you’ve paid your partner their share, they can be removed from the mortgage. This is known as a transfer of equity or a mortgage transfer. Whilst this is often what’s done, there’s no strict rule to say this is how it must be done.

Our remortgage calculator will be able to give you a guide as to what your new repayments could work out at, once you’ve completed your mortgage buyout.

Other ways to buy someone out of a house

If you’re unable to secure a mortgage, there are a couple of other options available to you:

• Sell the property and share the proceeds: This would be the most straightforward option, albeit it will involve you still having to find a new property to live in. However, the equity you release from your share of the proceeds will hopefully allow you to do this.
• Raise funds for a buyout: If possible, you could raise funds from elsewhere – perhaps through a family member – to pay the other owner(s) out. This would also allow you to remain in the property.
• Maintain joint ownership: If you’re still on good terms with the other owner(s) of the property you could look to come to an agreement where you stay in the property and share all the associated costs involved.

How much you can borrow

If you decide to remortgage the property, you’ll have to submit an application to your new lender, including a number of financial documents outlining your annual income and outgoings, such as payslips and bank statements.

These documents will then be used by a lender to conduct their own affordability assessment and to calculate how much they may be willing to let you borrow. The way they do this is to use a multiple of your annual income. So, how exactly does this work?

Let’s imagine you earn £30,000 a year. Most lenders would consider lending you £135,000 – this is based on 4.5 times your annual income. Some would consider lending you £150,000, based on 5 times your income. And a small minority would consider lending you £180,000 (6 times your salary).

If you’re self-employed or have an unpredictable income, it’s a good idea to speak to a mortgage expert with an understanding of lenders’ criteria as this can differ greatly across the market. They’ll help you overcome common home-buying obstacles that other business owners, contractors and freelancers face.

The more you want to borrow, the smarter it is to use a mortgage broker instead of applying directly through a lender as they would be able to establish what you need for your mortgage before identifying the right lender who can help.

Before submitting an application for a new mortgage deal, try our mortgage affordability calculator. It’s designed to give you a general idea of what you could borrow based on lenders’ criteria.

Overcoming credit score problems

It’s also worth seeking mortgage advice if you’ve had problems with debt in the past or you have a less than perfect credit rating. A number of lenders will approve applications from those with bad credit, but they’ll still have lending criteria that need to be met and will carry out a series of affordability checks.

There are so many lenders on the market that it can be hard to determine which ones will lend to you and which won’t. This is why it’s a good idea to speak to a mortgage broker. They’ll know the market like the back of their hand and will be able to point you in the direction of the lenders most likely to say ‘yes’.

You can also download your credit reports beforehand to see how your record currently looks.

Find a broker experienced with mortgage buyouts

Completing a mortgage buyout can be stressful, particularly if you’re going through a divorce, separation or you’re trying to buy out a person you don’t get along with. By seeking the support of a specialist, you can make life easier for yourself.

If you’d like to use a mortgage broker to improve your chances of getting the right mortgage deal, our broker matching service can help.

We’ll quickly assess your needs and circumstances before pairing you with a broker who has the right knowledge and expertise. For example, some mortgage brokers specialise in helping self-employed people to get a mortgage while others are experts when it comes to helping single parents. The brokers we match people with are fully-vetted and qualified, so you can be sure that you’re working with someone you can trust.

Simply call us on 0808 189 2301 or make an enquiry to get the ball rolling on your free, no-obligation chat.