Buying the missus out (loan required)

[lambysdad]

Hi all,

Splitting up with my partner but we have a joint mortgage, she will be moving out soon so we can both get on with our lives, The house has been up for sale for a while but no decent offers.
I've suggested that i buy her out (she is entitled to 50% of the equity).
This will be about 25k, would a loan be the best way to go?
If i want to put it on my mortgage i will have to pay a penalty to change, unless i take out a mortgage for just that amount?
Also, if she is coming off the mortgage, will i need a new mortgage anyway and therefore incur a penalty?

Advice please

[OneDs]

In my experience, if you can cover the salary multiple on the mortgage previously agreed the lender may transfer to sole without penalty (but charge a fee), however if you have to get a new mortgage and incur any penalty, 50% of the penalty should affect the equity payment to buy out your partner.

Edit regarding the loan, £25k is a large loan, you'd probably be better off if you can afford it and have enough equity to re-mortgage with current rates as they are.

Edited by OneDs on Tuesday 9th November 14:20

[lambysdad]

Thanks for that, i currently pay the full mortgage amount and don't (financially), see a problem putting another 25k on it.

[OneDs]

lambysdad said:

Thanks for that, i currently pay the full mortgage amount and don't (financially), see a problem putting another 25k on it.

Obviously the lender will take your view of no problem meaning, that based on the current outstanding amount + £25k, the new LTV %, and your salary multiple is acceptable.

Edited by OneDs on Tuesday 9th November 14:55

[Sarnie]

Approach your lender and ask them for a £25k further advance.

You won't have to pay any ERC on you main mortgage account.

This will be the cheapest way of doing it monthly payment wise, just be mindful of where your new LTV will leave you in relation to current market products.

[JonRB]

Do bear in mind that some lenders will expect you to do a full-blown remortgage to get a name off a mortgage. I'm with the Woolwich and will have to do this, at a cost of around £1200 in fees including a survey!

[lambysdad]

Sarnie said:

Approach your lender and ask them for a £25k further advance.

You won't have to pay any ERC on you main mortgage account.

This will be the cheapest way of doing it monthly payment wise, just be mindful of where your new LTV will leave you in relation to current market products.

Yep, i need to do some sums when i get home (weekend), house is cuurently on the market for 280k, my mortgage is 190k. I can afford more on my income but as you say i need to work out the new LTV and see what rates are available.
Also, i need to get the house re-valued i guess as the 'what's it worth price' may have dropped.

[lambysdad]

JonRB said:

Do bear in mind that some lenders will expect you to do a full-blown remortgage to get a name off a mortgage. I'm with the Woolwich and will have to do this, at a cost of around £1200 in fees including a survey!

This is definately one of my concerns, but i will have to see what they say.

[5potTurbo]

I bought out an ex some years ago and fortunately it didn't require a full remortgage, but there were solicitors fees to pay. I paid the fees so long as it was a 'full and final settlement' with the £ amount that changed hands to the ex.

For £25K I would mortgage that amount. As a bank loan the repayments would be vs. mortgage repayments.

Good luck!

[scotal]

lambysdad said:

JonRB said:

Do bear in mind that some lenders will expect you to do a full-blown remortgage to get a name off a mortgage. I'm with the Woolwich and will have to do this, at a cost of around £1200 in fees including a survey!

This is definately one of my concerns, but i will have to see what they say.

Remember that you might have stamp duty to pay as well.

Your lender will most liekly want to re-underwrite the loan.
If you are in an incentive period, they should allow you to do it without paying penalty fees. Technically they should allow you to keep your rate if you are on a low SVR or similar, however thy might use it as an opportunity to up your rate as well.

[JonRB]

scotal said:

Remember that you might have stamp duty to pay as well.

Not on £25k when the threshold is £125k, surely?

But, yes, in general Stamp Duty is payable if it is above the threshold, unless the transfer is the result of a Court Order issued due to divorce proceedings.

[JonRB]

scotal said:

however thy might use it as an opportunity to up your rate as well.

Indeed. I'm on a *very* good rate at the moment and I think the high fees I've been quoted are some kind of claw-back on letting me keep it.

[Sarnie]

Definitey get it revalued as her 50% may be less than £25k now................