How to buy someone out of a house

When you buy a house with someone else, whether that be a partner, family member, or friend, you all become joint property owners. And you therefore all have a responsibility to maintain the property, and pay the monthly mortgage repayments.

But what happens if you separate from your partner? Or you no longer want to own a property with this person? How do you become the sole owner of the property?

That's where buying someone out comes in. If you want to become the sole owner of a jointly owned property, you need to buy out the remaining owners to ensure everyone gets their fair share of the assets. But how do you go about that?

In this article, we're covering how to buy someone out of a house, tips and tricks for making it a smooth process, as well as highlighting some common difficulties people face along the way.

Who is responsible for paying the mortgage?

When multiple people are named on a property's mortgage, everyone on that agreement is jointly and severally liable for meeting the repayments. This means that you are responsible for the payments both individually, and as a group.

For example, if you've bought a house with a joint mortgage as a couple, you might assume that each party has to pay half of the loan, but this isn't the case. If one of you can't make the repayments, both individuals will be chased for the money. It's up to both of you to pay - even if one of you can't. This means both of your credit scores will be affected if you fail to make the repayments.

When a pair of property owners split, one must buy the other out (or if a group of owners want to separate, the person staying in the home must buy out whoever leaves). This is a lengthy legal process, and there are a lot of different steps you need to take to ensure everything is done correctly.

Buying someone out: your options

There are three different options you can choose from when you want to buy someone out of a home you own as joint tenants.

Sell the property and split the proceeds

If it's possible, you can sell the property and use the proceeds to repay any outstanding mortgage debt, and split the remaining proceeds once the sale is completed.

Keep joint ownership of the home

Some separated couples choose to keep the home as joint owners because they think it's the best option (for example, if there are children involved, one joint owner may choose to stay while the other moves out).

Or, the owners may decide to rent it out and split the costs involved, as well as the income earned. In this case, if there's an existing mortgage on the property, you can remortgage it to find a buy-to-let or second home mortgage.

Buy out the other person's share

Buying out the other person means giving them the money they need to move out and live somewhere else, so you can stay in your home as the sole owner.

What does it mean to buy someone out?

If you own a property with another person, you'll both be registered as the owners with the Land Registry. If you want to take over the part of the property owned by the other person, you'll have to buy them out. You must give the other owner their share of the equity in the home in order to remove them from the mortgage.

What happens in a mortgage buyout?

If you want to buy someone out of a joint mortgage, you'll take over the other owner's share of the mortgage, as well as taking ownership of their share of the property itself: this is known as transfer of equity.

Once you've got the mortgage approved, the other owner's name will be removed from the mortgage and the property's title deeds, making you the sole owner of the property and therefore being solely responsible for repaying the mortgage.

How to buy someone out of a house

Transfer of equity

When you buy someone out of a house, you are buying their equity in the property which is then transferred to you. If you want to buy someone out of a house, first you need to know the other party's equity share. Equity share refers to the proportion of the property each person owns. It's not always a 50/50 split, so make sure you know how the equity is shared before you start the process.

To calculate equity, you need to:

1. Get a property valuation by a surveyor (or most lenders who will do this for a small fee).
2. Ask your current mortgage lender for a redemption certificate, which will tell you how much more you need to pay on the mortgage. It'll also tell you about any early repayment charges and other fees.
3. Subtract the remaining mortgage figure from the property value. This gives you the equity of the entire property.
4. Calculate how much equity the other party has in the property. If it's an equal share, you'll simply divide the result by two. But if each owner has a different share value, the amount of equity will depend on the percentage share.

For example, a couple may have a property valued at £400,000 with a mortgage of £200,000. This gives them £200,000 worth of equity. If their agreement states they get a 50/50 split, this means the person being bought out of the home is entitled to £100,000.

Check out our instant Online Valuation Tool here for a quick property valuation right now.

Buying your ex partner out of a house in a divorce

It can be more difficult to calculate the equity if the home is just one part of a specific divorce settlement. The settlement will determine how the house is split between you and your ex partner, and by extension the final share of the equity.

If you don't go through a mortgage buyout, both parties will be equally responsible for the monthly repayments. Even if they've moved out, they'll be legally liable for the mortgage debt for as long as their name stays on the mortgage.

You can read more about who gets the house in a divorce here. It's always best to seek independent legal advice if you're unsure about how to buy one partner out of your family home or how much equity you need to pay.

Find a mortgage

Most people will need to borrow more money to be able to afford to buy someone out and obtain full ownership. Some people will want to stay with the same lender. You can do this by applying for a higher mortgage with your current mortgage lender if your existing deal has expired.

You could also ask your lender for a further advance, which is a top up mortgage that helps you avoid early repayment charges.

Transfer of equity remortgage

This option refers to a mortgage transfer, whereby you switch your existing mortgage deal with your current lender for a new one with a new lender. The mortgage application is completed by you, 'the new owner'. With the help of a mortgage broker, you'll be able to choose the repayment method and mortgage term.

Once you have the mortgage approved, this new mortgage replaces the existing one whilst amending the property owners at the same time. When the remortgage is complete, your new lender will transfer funds to your previous one in order to repay your old mortgage, which releases the other joint owner from the debt.

In all cases, you need to make sure your lender agrees to the transfer of equity before you go ahead with the process. They'll run a credit check on you to calculate if you can afford to have sole responsibility for the mortgage payments.

If you own the property as tenants in common, the remaining owners can split the rest of the mortgage between them, as well as any equity. You still may need to remortgage to do this.

To find out more about remortgaging your property, take a look at one of our previous blogs.

Finding the right lender

If you're unsure about what to do, it's better to speak to a mortgage broker. As mortgage experts, they'll know the market well and be able to properly advise you on which mortgage deal is the best for your circumstances.

Though you'll have to pay mortgage broker fees, they're very much worth the investment when you consider how much you can save by getting a better deal you may not have found yourself.

If you can't afford a mortgage buyout on your own, it's also recommended to seek advice from a specialist mortgage broker.

Read more about how to apply for a mortgage in one of our previous blogs.

What happens if you can't afford to buy someone out?

You have options if you're struggling with affordability. One way is an Income Boost remortgage. This refers to adding a family member or friend's income onto the mortgage application without adding their name to the title deed.

Another option is a springboard mortgage, or Family Guarantor mortgage. This involves a family member or friend gifting you the money (usually 10% of the property price). They can either give you a lump sum or place them in a special savings account the lender can use as security.

After a certain period of time, your loved one will get their money back (plus interest), so long as you keep up with your monthly mortgage repayments.

Private equity loan

If you don't have any family support, you can use a private equity loan to get a second charge mortgage against the home. Your mortgage lender gives you the extra money you need to afford the home on your own by increasing your down payment in return for a share of the property.

Again, it's always best to seek advice from a mortgage advisor or a financial advisor if you're unsure about what to do next.

Take a look at the different types of mortgages you can apply for here.

How long does it take to buy someone out of a house?

If it's a simple equity split, mortgage buyouts can take between four to six weeks. But if there are disputes or disagreements about how the owners want to split the equity in the property, or you're struggling to pass mortgage affordability for yourself, this can make the whole process take a lot longer.

Take a look at how long a remortgage takes here.

Challenges of buying someone out of a house

Buying someone out of a house can come with some challenges. It can be a lengthy process, and it's very common to come across bumps in the road.

Affordability

One of the most common obstacles is not being able to pass mortgage affordability checks. To get a new mortgage, you have to prove to the new lender you can afford the monthly repayments on your own. But because you're basing it off a sole salary, the amount you're able to borrow can sometimes be a lot less.

This is why it's so important to work with a mortgage broker who can find the best deal for you. Every lender approaches affordability differently, so finding the right one to suit your needs isn't an impossible feat. For example, some lenders will lend four times your annual income, while others could lend up to six times your salary.

Some will lend based on your employment income, but others will also factor self-employed income, dividend income, benefits, or spousal maintenance payments. A lot of people will use a mortgage broker matching service to source the best deal for their circumstances.

You can read more about affordability rules in the UK here.

Penalties

Another potential challenge people come across is having to **pay an early repayment charge (ERC). **When you're going through a mortgage buyout, and want to exit the mortgage to remove your ex partner, you often will have to pay this penalty.

The amount depends on the lender, as well as the percentage of the outstanding mortgage balance. In an already expensive process, this can of course raise issues as it's another fee to pay. You'll also have to account for any legal fees from solicitor advice throughout the process.

Summary: Keep it fair, pay their share!

Although there are a lot of different steps you need to take to buy someone out of a house, there is plenty of support for each step of the process to ensure everything is done correctly.

The key is calculating how much the other person's share of the mortgage is worth so you know how much money you need to pay to buy them out. This will also help you with affordability checks, mortgage applications, and budgeting when you need to pay for any other costs involved.

Part of that equity calculation is knowing your property's value. Though it's recommended to use a conveyancer, you can get an instant initial look using our up-to-date Online Valuation Tool right now - so you have an idea of what you're working with from the get go.

It's also super important you have the right advice throughout the process, from legal and conveyancing to financial and mortgage advice. That way you'll know what to do during the whole process with supportive professionals who can ensure it runs as smoothly as possible.