Buying Someone Out Of a House
We regularly help people buy someone out of a property. Our team provides certainty on what you can borrow and the best way to pay their share of the equity. We’ve helped thousands of customers with buyouts, with 15 experts ready to assist. We guarantee to get your mortgage approved and find you the best deal. If we can’t and someone else does, we’ll give you £100!*
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Author: Pete Mugleston
CeMAP Mortgage Advisor, MD
Reviewed by: Jon Nixon
Former Director of Distribution
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A mortgage buyout can be a sensitive process, but it’s something we do all the time.
Once you have agreed a buyout figure and who keeps the property, the person taking it on will need to be able to afford the mortgage with their own income, or if adding someone else to the mortgage, theirs too (this is quite common).
The transfer and buyout can be done in a couple of ways:
- A standard transfer of equity with your existing lender, where you keep your current deal (a good idea if you’re tied in), and if you’re borrowing more, you take a second product for the extra with the same lender,
- A remortgage to a new lender for the full amount, plus the extra you need (where there is also a transfer of equity in the legal process).
Adding someone new at the same time can be done without too much more paperwork, provided they are accepted by the lender, and you’d benefit from their income contributing to affordabilty. You can actually also add someone to the mortgage and keep them off the ownership (common for new partners you’re not quite ready to give the house over to!), and this is doable with several lenders (see JBSP).
Whoever is going to be on the new mortgage will be assessed for credit history and income and any other criteria as any mortgage application – issues here may reduce the number of lenders that can consider you, but often still be doable with specialists.
We often help people borrow more money too, and this can be done either in full with the new lender or by using a secured loan (second mortgage), which may offer more flexible options.
It can all be a bit complex with loads of lenders and options – for help here, just reach out and one of our team will do it all for you!!
A mortgage buyout occurs when one person 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.
Transfers of Equity are very common and can occur for a variety of reasons. It could be due to divorce or separation, adding spouses or partners and gifting property for estate planning reasons.
After existing mortgage balances, share buyout amounts, and potential redemption penalties have all been established, the key priority is to assess the affordability of the remaining party to the mortgage.
Most lenders treat a Transfer of Equity as a new application, especially where there is a change of borrower liability.
This is where tailored advice from a good mortgage broker, after conducting a full review of income, credit and overall affordability, can obtain the best possible outcome for a client.
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.
If you decide to remortgage the property, you’ll have to apply to your new lender, including a number of financial documents outlining your annual income and outgoings, such as payslips and bank statements.
A lender will then use these documents to conduct their own affordability assessment and calculate how much they may be willing to let you borrow. They do this by using 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 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).
Suppose you’re self-employed or have an unpredictable income. In that case, 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. They can establish what you need for your mortgage before identifying the right lender who can help.
Try our mortgage affordability calculator before submitting an application for a new mortgage deal. It’s designed to give you a general idea of what you could borrow based on lenders’ criteria.
Mortgage Affordability Calculator
Use this calculator to determine how much you could potentially borrow for a mortgage, based on the typical salary multiples used by most UK lenders.
Based on your total household income, you could borrow up to:
*
4.5x income
This is what most lenders would consider letting you borrow
5x income
Some lenders would consider letting you borrow this amount
6x income
Very few lenders would consider letting you borrow this amount
*To get exact numbers based on your specific income, outgoings, age and other info, you'll need to speak to one of our experts. Lending policies change regularly, so this is purely for illustrative purposes only, and is not tailored financial advice.
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How to remortgage to buy someone out of a house
To buy someone out of a house, one party pays the other for their share. This process requires a property valuation, an agreement on the buyout amount, updating property titles, and possibly a new mortgage or remortgage to fund it. Legal advice is key, and potential tax implications must be considered.
One of the potential costs to consider is Stamp Duty. Check out our guide if you’re unsure whether you’ll need to pay Stamp Duty when buying out a partner.
Your first step should be to find a specialist remortgage broker. This will save you a lot of time and boost your chances of getting approved at the best terms available.
Using our service, you can speak straight away to the right broker by simply enquiring 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 learn how to calculate the cost of your buyout, or head to our remortgage guide to learn more about the refinancing process.
Related Articles
Calculating the cost of a mortgage buyout
To calculate the cost of 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 you share in the home. However, things can get more complicated if you’ve contributed 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 outstanding amount from 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 can give you a guide to your new repayments once you’ve completed your mortgage buyout.
Remortgage Calculator
Our remortgage calculator can tell you what your new loan-to-value (LTV) ratio and repayments will be after you've remortgaged, with enough equity released to cover your mortgage buyout. .
New LTV:
After you have remortgaged your new LTV ratio will be and your new mortgage payments will be as indicated below…
New Monthly Repayments:
Get started with an expert broker to find out how much they can help you save on your remortgage.
If you’re unable to secure a mortgage, there are a couple of other options available to you:
This would be the most straightforward option, although it will still involve you finding a new property to live in. The equity you release from your share of the proceeds will hopefully allow you to do this.
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.
If you’re still on good terms with the other owner(s) of the property,, you could consider an agreement in which you stay in the property and share all the associated costs.
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Overcoming credit score problems
It’s also worth seeking mortgage advice if you’ve had debt problems or 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 speaking to a mortgage broker is a good idea. They’ll know the market like the back of their hand and can point you toward the lenders most likely to say ‘yes’.
You can also download your credit reports beforehand to see how your record looks.
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Find a broker experienced with mortgage buyouts
Completing a mortgage buyout can be stressful, particularly if you’re going through a divorce or separation or 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, we can help.
We’ll quickly assess your needs and circumstances before pairing you with a broker with the right knowledge and expertise. For example, some mortgage brokers specialise in helping self-employed people get a mortgage, while others are experts in helping single parents. The brokers we match people with are fully vetted and qualified, so you can be sure you’re working with someone you can trust.
Simply call us on 0330 818 7026 or make an enquiry to get the ball rolling on your no-obligation chat.
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FAQs
If you’ve calculated how much equity you and your ex-partner share but can’t agree on who’s contributed what, it may be wise to speak to a solicitor. If you have proof of how much you’ve paid towards the deposit and mortgage payments, this can help your case.
Got a question?
We know everyone's circumstances are different, so if you have a specific question about buying someone out then get in touch.
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Pete Mugleston
CeMAP Mortgage Advisor, MD
Pete, a CeMAP-qualified mortgage advisor and an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete successfully went the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained and his love of helping people reach their goals led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!
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