Breaking up with your partner can be difficult to adjust to, both emotionally and financially.
Splitting up can make you feel less secure than you once were – especially if you jointly own a house.
But if you’re financially tied this way to your partner, there are steps you can take to break these ties and make yourself the sole owner.
Let’s take a look at your options:
Reach an agreement
It’s possible that you’ll be able to stay in your house and your partner move out. But if you and your partner jointly own the property outright (meaning you’re mortgage-free), your ex will probably want their share.
In this case, you may be able to reach an agreement without forking out for costly legal proceedings. You’ll need to start by getting your home valued to work out what it’s worth, and you can ask your local estate agent to do this – usually for free. If you have the funds to cover half of the sum they come up with, you have the option of buying your partner’s share so they no longer own part of the property.
If you can’t afford to do this, you can take out a mortgage on half of the equity in your property and use this to cover your ex’s share (more on this later).
Your other option is to sell the property and split the proceeds between you. In this case, the money should be split according to any agreement you had when you bought it. For example, whether you chose to be named joint tenants or tenants in common will have an effect on how the money is split.
Put simply, if you are named joint tenants, regardless of whether you both contributed a different sum towards the deposit or only one of you paid the mortgage, the profits from the sale of your home should be split 50:50 as you’re both entitled to an equal share. On the other hand, if you’re named as Tenants in Common, you may have a pre-existing agreement for how the money is shared out.
If you currently still have a joint mortgage with your partner, you should bear in mind that you’re both responsible for the whole mortgage, not just half each. So while you consider your options, make sure you keep up with your repayments.
Missing payments can put your home at risk of repossession - not to mention have a negative impact on your credit history. If you’re struggling, let your lender know – they may be able to offer you a mortgage repayment holiday.
Remortgaging in just your name
If you still share a mortgage, or if you own the property outright but you’re planning to mortgage one half to buy your ex out, you should speak to your lender as soon as possible. In fact, your mortgage provider should be informed whenever there is a change in your circumstances.
To remove your ex-partner from the original mortgage agreement and the Title Deeds, you’ll need to complete a Transfer of Equity. This means that you’ll be the sole owner of the property and agree to pay your partner their share of the equity in the property following a valuation. This valuation will be carried out by your lender.
The mortgage provider needs to be sure that you can afford the monthly mortgage payments on your own. Your income and expenditure would need to be assessed and your affordability checked.
To buy your partner out, your mortgage payments are likely to be increased. Having looked at your financial circumstances, if the lender thinks that you’ll struggle to afford the higher payments, they can refuse your application.
Some lenders may only agree to lend to you if a guarantor, usually a close relative, agrees to be responsible for the mortgage payments if you’re unable to pay. This means that if you miss any mortgage payments, your guarantor is legally responsible for the debt. This can limit the risk to the lender.
Although this type of mortgage is quite uncommon these days, it may still be an option. If this is a route you’re considering, you should weigh up the pros and cons. You can read more about this type of mortgage here.
Other than remortgaging, another option you could consider is taking out a secured loan, providing you aren’t mortgage-free. With this type of loan, you can borrow a large amount of money and repay it over a longer period of time.
Just be sure you can afford to make these repayments and keep on top of your mortgage. As the name suggests, this type of loan is secured to your property. This means that if you fail to keep up with your repayments – as with a mortgage – your home can be repossessed.
Here are Ocean, you can check whether you’re likely be accepted for a secured loan before you apply. We are a broker for secured loans, which you can learn more about here.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.