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Mortgage Buyout Solutions

We explore the ways to buy somebody out of a mortgage

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 16th September 2019 *

If you are considering the possibility of a mortgage buyout as a result of separation or divorce, life is probably stressful enough without the added hassle of trying to work out which mortgage buyout option might be best for you.

Let’s take a look at some of the ways you could buy somebody out of a mortgage.

This article covers:

If you’re pressed for time or already have some questions, get in touch and we’ll connect you with an expert mortgage advisor who will be happy to answer all your questions.

The experts we work with have whole of market experience and are perfectly positioned to help make what may be an awkward situation just that little bit easier. With access to lenders across the UK, they will help find the right lender and the best deal for your circumstances.

Call us on 0808 189 2301 or make an online enquiry and speak to someone who can help get you started in the right direction.

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What is a mortgage buyout?

A mortgage buyout is when one owner of a property pays the other owner’s share of the equity of the property. 

A mortgage buyout releases the co-owner from a mortgage. Their name is taken off the mortgage and removed from the title deeds.

How to buy out your partner in a mortgage

When it comes to buying someone out of a mortgage, affordability is often a big consideration. If you don’t have thousands of pounds lying around in savings (which, sadly, most of us don’t), you may need to raise extra money to pay for your partner’s share of the property. You’ll also need to show that you can afford a mortgage which was previously paid by two people.

Fortunately, there are lots of lenders with different ways of calculating how much you can afford to borrow. So if you’re a contractor, self-employed or want to use more than one source of income to cover your mortgage, you should be able to find a deal to suit your needs.

Have a look at our mortgage calculator, discussed further down this article, for a rough idea of what you might be able to borrow and how your choice of lender could make a surprising difference to the affordability.

Ready to take the next step in buying your ex out of your mortgage? Whether you want to ask a quick question or are interested in finding out which buyout mortgage option might best suit your circumstances, the specialists we work with have whole of market experience and are well-positioned to help take some of the stress off your shoulders by helping smooth the way from answering questions, to sourcing the best mortgage for your needs.

Give us a call on 0808 189 2301 or make an enquiry and talk to someone with the right experience today.

How to increase your mortgage to buy out your partner

If you are in the first few years of a fixed rate mortgage and want to refinance in order to buy out your ex-partner, you should be aware that you may be charged a fee as part of the change. 

Early Repayment Charges, or ERCs, apply to the first few years of a fixed rate mortgage. Lenders often apply a charge if you want to exit, refinance or pay off your fixed rate mortgage in the first 2-5 years, depending on your individual fixed mortgage arrangement. 

To find out if your lender will apply a mortgage buyout penalty in the form of an ERC when you alter the terms of your mortgage, review your contract or contact your mortgage lender directly. 

If you are outside the Early Repayment Charge period and want to consider switching your mortgage for a better deal, or to explore if a better deal might be available, call us on 0808 189 2301 or make an enquiry and we’ll connect you with a whole of market specialist who will happily guide you through all your options.

Remortgaging to buy out your partner

Remortgaging is when you take out another or a different kind of mortgage on a property, and is one of the mortgage buyout options you could consider.

If you want to remortgage to buy out your partner, there are several ways you can do this:

  • Remortgage your home with the same lender by affecting a product transfer, or internal remortgage. This is simply a straight swap, sometimes at a more favourable rate. Your lender may wish to reassess your eligibility since you are effectively applying to take over the same lending terms by yourself and they will want to make sure you can afford the mortgage repayments on your own.
  • Switch to a new lender. This option would give you a totally clean slate and may be beneficial since your new lender will be assessing you in a fresh light, rather than with the view that you used to hold a joint mortgage. Your new lender will pay the money released to your original mortgage provider, effectively paying off your old mortgage and continuing the new mortgage on the agreed terms. 
  • Want to keep the property you shared with your partner, but prefer to move somewhere new? If you want to buy out your partner in a mortgage, but prefer not to remain living in the home you shared with your ex, it’s possible to keep the property but let it to tenants with a buy to let mortgage.

Can I remortgage my house to buy out my partner?

Remortgaging your house to buy out your partner should be possible, and is often the preferred way for people who are seeking a mortgage buyout agreement. 

It may be possible to remortgage your home with the same lender by affecting a product transfer, or internal remortgage. This is simply a straight swap, sometimes at a more favourable rate. 

Your lender might reassess your eligibility since you are effectively applying to take over the same lending terms by yourself and they will want to make sure you can afford the mortgage repayments on your own.

You could also consider switching to a new lender, allowing you a totally clean slate. Some borrowers prefer this option since your new lender will be assessing you in a fresh light, rather than with the view that you used to hold a joint mortgage. 

Your new lender will pay the money released to your original mortgage provider, effectively paying off your old mortgage and continuing the new loan on the agreed terms. 

How to remortgage to buy out a partner

As discussed above, there are several different remortgaging options available.

To get a firm idea of which option might best suit your own circumstances, give us a call on 0808 189 2301 or make an enquiry and we’ll put you in touch with a whole of market broker  experienced in buy out arrangements.

Remortgaging to buy out a Help to Buy or shared equity mortgage

With a Help to Buy mortgage, the interest borrowers must pay back on the original Help to Buy loan comes on top of the monthly mortgage repayments, so it’s vital you have available funds to meet requirements as repayments could increase substantially over time. 

Some new-build properties with shared equity funded by the builders may have interest payments similar to Help To Buy equity loans, and may be payable in 10 years irrespective of your mortgage term.

This is a very good reason to consider buying out your Help to Buy/shared equity mortgage.

If you’re approaching the end of your current mortgage arrangement, there are two different options you could use to buy out of the Help to Buy/shared equity mortgage:

  1. Remortgage and keep the Equity Loan alongside, if the equity loan does not have to be repaid, or if you have alternative funds to repay it, which is basically what you’ve already been doing
  2. Remortgage to get rid of the Equity Loan - if you have to, or choose to repay it - or some part of it (there will be a £115 administration fee to do this).

Although option 2 means you’ll end up with a larger mortgage, you will no longer be tied into the loan which could become expensive in later years.

Before deciding what to do you should speak to a mortgage advisor as you need to make sure your financial position is strong enough to withstand extra mortgage payments.

Talk to an expert in Help to Buy mortgages today, call us on 0808 189 2301 or make an enquiry online.

Remortgaging to buy out a Shared Ownership deal

With Shared Ownership you own some of the property and rent the rest.

Whether you want to remortgage to buy out your current mortgage or take over the mortgage in your name alone due to divorce or separation this should be achievable with the right advice.

It is also possible to increase your initial share in the shared ownership property and may even be possible to get finance to enable you to become the full owner of your shared ownership property.

Talk to an expert to get the right advice. Call us on 0808 189 2301 or make an enquiry and we’ll put you in touch with an expert who specialises in Shared Ownership mortgages.

Mortgage buyout after a divorce

When you divorce or dissolve your civil partnership, probably the biggest financial decision you face is what happens to the home you shared.

You have several options:

  1. Sell the home and both move out. This option could allow each of you to use the money from the sale of your property as a deposit for another home.
  2. Keep the home - if it’s possible, you could keep the home and the way it is owned without making any changes. This option might suit you if you have children and don’t want to disrupt their schooling or friendship groups. Agree who gets to stay living in the house with the children, with an agreed time when you might relook at your options, perhaps when your children are 18 or leave school.
  3. Transfer a share of the value of the property from one partner to the other as part of an agreed financial settlement. This would mean that the partner giving up a share of the ownership rights would retain ‘interest’ in the home and still get a percentage of its value in the future when it was sold. 
  4. Arrange for one of you to buy the other person out of the mortgage.

How to buy your spouse out of a mortgage

If you decide you wish to buy your ex out of your mortgage, and are happy with your current mortgage terms, the first step would be to talk to your lender to see if they will accept your request to take over the mortgage in your name alone.

Because of Financial Conduct Authority (FCA) rules, the lender will carry out affordability checks, which will entail in-depth questions and additional checks to make sure you can afford to pay a mortgage which was previously covered by two people.

If you are in the early years of a fixed-rate mortgage, this might be the only viable way to effect the changes since you may be subject to an Early Repayment Charge (ERC). Some lenders apply a fee for any changes made to the mortgage, so check with your mortgage lender to see what costs might be associated with the changes you wish to make.

Should you wish to shop around for another mortgage deal, and leaving your current mortgage won’t carry prohibitive penalties, you can save time and trouble by talking to a whole of market mortgage expert.

The mortgage brokers we work with are experienced in arranging both remortgages and buyout mortgages. Call us on 0808 189 2301 or make an enquiry and we’ll put you in touch with an expert who will be happy to answer any questions and let you know the kind of mortgage arrangements which might suit your needs.

2nd mortgage buyout

Second mortgages or second charge mortgages are a secured loan (not to be confused with 2nd home mortgages, which are entirely different). As a borrower, taking on a second mortgage means you use your home as security. Many people choose second mortgages to raise money instead of remortgaging. 

See our Complete guide to second charge loans.

A 2nd mortgage loan can be a great option for many borrowers looking to raise funds without having to refinance their main mortgage.

If your circumstances are unusual in terms of credit history or you have an unconventional or inconsistent income, you might benefit from using a second charge mortgage.

When assessing borrowers for 2nd charge loans, lenders must comply with stricter UK and EU rules governing mortgage advice, affordable lending and dealing with payment difficulties. This means lenders have to make the same affordability checks against the borrower’s financial circumstances.

It is essential that you can provide evidence that you can afford to pay back the loan.

A second mortgage isn’t always the most obvious route to buy out a partner on a mortgage, but it might be something that, given the right circumstances, makes sense.

If you want to talk to someone with experience in 2nd mortgages, give us a call on 0808 189 2301 or make an enquiry and we’ll put you in touch with one of the experts we work with. 

Getting a mortgage to buy out siblings

If you and your siblings have inherited a property following the death of your parent, you may wish to buy the share of the property left to your siblings. There are various ways you might be able to do this.

  1. If the property has an existing mortgage which you inherited along with your siblings you could negotiate with them to take on the mortgage in your own name and buy their share of the property from them this way.
  2. If you wanted to keep the property but not live in it, you could use a buy to let mortgage to buy out your siblings and then rent the property to tenants to cover the mortgage repayments.

Feel free to get in touch and we’ll introduce you to one of the expert mortgage advisors we work with every day. They will be happy to answer any questions you might have.

Try our mortgage calculator to find out the affordability of a buyout mortgage loan

To get a rough indication of how much you might be able to borrow to buy out a mortgage partner, try our mortgage calculator

Remember, this will only give you a general idea of what you could borrow and your choice of lender could make a surprising difference to the affordability.

Every lender has different ways of calculating how much you can afford to borrow. So if you’re a contractor, self-employed or want to use more than one source of income to cover your mortgage, you should be able to find a mortgage to suit your needs.

Speak to an expert advisor about the right buyout mortgage option for you

Whether you’re looking to remortgage to buy out your ex, buy out shared equity from siblings following an inheritance or looking to remortgage to buy out your Help to Buy or shared equity mortgage, get the right advice from an expert with experience helping people looking to buy out of their mortgage arrangements.

The specialist advisors we work with have whole of market expertise and will be happy to answer any questions you might have.

Get in touch using our quick enquiry form or call us on 0808 189 2301 and we’ll introduce you to the best advisor today.

Updated: 16th September 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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