# Remortgaging to buy a partner out



## Goodbye (May 16, 2021)

Who has done this and how was it achieved? Does it mean you had that extra cash already sitting in savings and you split it such that your spouse took a greater share representing his/her share of the equity in the house? Or does the mortgage lender agree to give your spouse cash and then increase your mortgage payments / mortgage term?


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## Zedd (Jul 27, 2021)

I'd need to know your financial situation first. Generally, you need to refinance the home to get your partner off the note. There will be additional work to remove him/her from the title of the home. You can think of it is buying the house from yourself, but only having half the equity to put back into your new down payment and as a result, the payment will increase, unless you had more equity remaining after the split than you originally put into the downpayment. Obviously, the payment will vary along with your down payment amount, the interest rate, and term of the loan.


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## MarmiteC (Jun 28, 2021)

My Ex husband bought me out. He couldn't get additional in the mortgage so he paid with cash, however the principle would have been the same. Essentially he obtained the funds, removed me from the mortgage, and I had to sign a transfer TR1 form to agree to transfer my share in the property which was then filed with land registry. This was in the UK.


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## Goodbye (May 16, 2021)

Thanks. Ok so this is helpful, you both... But assuming you don't have the spare cash and you can remortgage the house, how does the spouse actually get their share of the equity? Does the bank give it to them in cash?


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## Zedd (Jul 27, 2021)

Goodbye said:


> how does the spouse actually get their share of the equity?


Like I said, you actually need to buy the house from yourself. An example.

You and your partner bought a 200K house, you put 50K down, 150K mortgage. You pay the loan for a certain amount of time, and now have 100K remaining on the mortgage and the house has increased in value to 300k, so you have 200K in equity via the down payment, your payments made, plus the increase in the home's value.

So, you buy the house from yourself for 300K. When you do so, as a couple, you have 200K in a check given back to you (300K-100K held for the existing mortgage) 

You split the 200K with your partner, and you put your half, the 100K, down on your now 300K house by yourself with a 200K mortgage.


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## Goodbye (May 16, 2021)

MarmiteC said:


> My Ex husband bought me out. He couldn't get additional in the mortgage so he paid with cash, however the principle would have been the same. Essentially he obtained the funds, removed me from the mortgage, and I had to sign a transfer TR1 form to agree to transfer my share in the property which was then filed with land registry. This was in the UK.


Ok I guess some may obtain the cash by other means if you can't get the increased mortgage and don't have that much cash in savings and investments. Loan shark maybe, or help from friends and family.


Zedd said:


> Like I said, you actually need to buy the house from yourself. An example.
> 
> You and your partner bought a 200K house, you put 50K down, 150K mortgage. You pay the loan for a certain amount of time, and now have 100K remaining on the mortgage and the house has increased in value to 300k, so you have 200K in equity via the down payment, your payments made, plus the increase in the home's value.
> 
> ...


This example really helps bring it to life thank you. When you say in a check given back, so the bank is actually giving the cash to you to enable you split it with the partner. Makes sense. Thank you.


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## Zedd (Jul 27, 2021)

Goodbye said:


> Ok I guess some may obtain the cash by other means if you can't get the increased mortgage and don't have that much cash in savings and investments. Loan shark maybe, or help from friends and family.
> 
> This example really helps bring it to life thank you. When you say in a check given back, so the bank is actually giving the cash to you to enable you split it with the partner. Makes sense. Thank you.


They may not physically hand you a check to repurchase given that it'd be a refinance, but that's essentially what happens. They give you 2 100K checks. You hand one to your partner, you hand one back to them immediately for a down payment.


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## Livvie (Jan 20, 2014)

Note: You might not qualify for an increased mortgage yourself.


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## SpinyNorman (Jan 24, 2018)

You(plural) are selling the house to you(singular). It is mostly the same as selling it to some third party. At settlement, any negotiated selling costs, your loan or other liens(if any) would be paid and then the sellers would get what is left of the negotiated purchase price. 

As you might guess, this isn't a novel idea to the mortgage industry. I bought my ex out and she got a check that was never in my hands. If the house is worth more than what is owed and the bank thinks you can pay, you can finance it for more than what you owe and get paid the difference if you choose. OTOH if no bank thinks you alone can pay what is owed, you won't be able to buy him out. If you have a bunch of cash sitting around or a rich relative willing to help, this would be considered as part of your ability to pay.


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## MarmiteC (Jun 28, 2021)

I think it will depend how it's done with regards to a mortgage here in the UK. If my husband had bought the house from us, I would have received the money through his conveyancing solicitor. If he remortgaged to release equity I think he would have received the money, and no true conveyancing happens. 
In my case, even though it was cash, he should have transferred the money via the solicitor. However his solicitor was slow with everything and missed the payment deadline set by the court, so my ex husband settled with me directly and we both signed a paper which I drew up stating the financial court order had been discharged. 

My ex husband then simply removed me from the mortgage and the TR1 form was filed with the lender and land registry to discharge my interest in the property.


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## In Absentia (Aug 21, 2012)

Following 😀


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## Goodbye (May 16, 2021)

MarmiteC said:


> I think it will depend how it's done with regards to a mortgage here in the UK. If my husband had bought the house from us, I would have received the money through his conveyancing solicitor. If he remortgaged to release equity I think he would have received the money, and no true conveyancing happens.
> In my case, even though it was cash, he should have transferred the money via the solicitor. However his solicitor was slow with everything and missed the payment deadline set by the court, so my ex husband settled with me directly and we both signed a paper which I drew up stating the financial court order had been discharged.
> 
> My ex husband then simply removed me from the mortgage and the TR1 form was filed with the lender and land registry to discharge my interest in the property.


Thank you. It's useful to read a UK experience of this. Looks like it will boil down to whether the banks think it's affordable - 2 incomes reduced to 1 AND an increased borrowing.


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## SpinyNorman (Jan 24, 2018)

Don't know if it helps to think of it this way, so here goes. Imagine you and your spouse sold it to some third party, you and your spouse would each get half of the proceeds of the sale. Imagine right after the divorce you bought it from the third party. If the bank thought the house was worth the price and you were creditworthy for it, you could borrow the full price or use your cash(some or all) from the sale and borrow less. Of course, if the bank balked at lending that much, you would have to use cash to get the sale.

The third party is for illustrative purposes, all the same things are possible w/o him and your lender is familiar with these situations.


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## MarmiteC (Jun 28, 2021)

Goodbye said:


> Thank you. It's useful to read a UK experience of this. Looks like it will boil down to whether the banks think it's affordable - 2 incomes reduced to 1 AND an increased borrowing.


How it's paid can be agreed by you 2 in the divorce and financial settlement order. 

I don't know if this helps, but I let my XH have the house for less than half the equity amount due. The alternative was an external sale and that would have incurred fees on both sides. I factored those in to the amount I would have actually received net after sale. (I let him have it for even less than that as it was what he could afford, on the proviso that he paid the full mortgage each month from the date we verbally agreed until settlement so that I wasn't also helping the equity to grow further. )


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## DTO (Dec 18, 2011)

Goodbye said:


> Ok I guess some may obtain the cash by other means if you can't get the increased mortgage and don't have that much cash in savings and investments. Loan shark maybe, or help from friends and family.
> 
> This example really helps bring it to life thank you. When you say in a check given back, so the bank is actually giving the cash to you to enable you split it with the partner. Makes sense. Thank you.


Why can't you get the mortgage? If that's because the home value has declined, it may be wiser to sell.

Or, you can negotiate. You sell a property and net less than the mortgage balance, both of you have to pay. Could be a bargaining chip.


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## Goodbye (May 16, 2021)

DTO said:


> Why can't you get the mortgage? If that's because the home value has declined, it may be wiser to sell.
> 
> Or, you can negotiate. You sell a property and net less than the mortgage balance, both of you have to pay. could be a bargaining chip.


I don't want to live in this house as it's better for him to live in it. It's closer to his family. I was wondering whether he'd be able to afford to buy me out.
I like Marmite C's scenario and I'm open to being flexible about the value I agree to, so that he can afford it. If the other way around, he wouldn't be as considerate but I'm used to taking the high road. But also I'd like his family to be nearby when our kids have their time with him. And I like the thought of avoiding excess sale fees.


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## D0nnivain (Mar 13, 2021)

If the numbers don't work for the mortgage company you may not be able to buy out the spouse.


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