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My girlfriend and I have split up and we have a mortgage together. She wants me to buy her out as she is moving abroad...

by kalbery 11 February 2010 |

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I'd rather not involve solicitors if possible. What's the fairest / best way to work this out?
I put down the deposit on the flat (ca. £20k, 5%), and we have since paid equal amounts into the mortage (initially half interest, half repayment, latterly repayment). We bought in 2007 with a small deposit so expect there to be very little (if any) equity in the property. We have also furnished the flat more or less 50:50.
Her initial request was that I pay her back the mortgage payments she has paid over the last 3 years but obviously this isn't quite fair...
Only trouble is this is v sudden and she is leaving in 2 weeks!!
First thing is to get a valuation I guess, but any thoughts appreciated.

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85

ckm4328 posted
You really ought to use Solicitors for both of you. You want her name to be removed from the property and she will want her name taken off the mortgage.
I would say the fairest way would be current property value less Outstanding mortgage less £20,000 for you divded by 2.
If house value is £200,000 and mortgage is £170,000 then you pay her £5,000.
Posted on 11 February 2010 | Love 2 loves Report
212

SoftwareBear posted
if 20k was 5% ... property was £400K
Do you mean you initially paid interest only ... then changed to repayment later ... presumably when the interest rate dropped ?
given you bought in 2007 suspect you'll be sharing negative equity so don't pay her anything yet.
Also can you support the ~ £380K mortgage on your own ... if not ... your lender may not let this happen .. you'll be forced to sell ... and will loose everything.
You'd be a fool to not use a solicitor.
Advise she doesn't go anywhere until this is sorted ... and she needs an independent solicitor too ... you go to yours first asap ... or you'll be forced to go elsewhere.
Posted on 11 February 2010 | Love 2 loves Report
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kalbery posted
Thanks Software Bear. Initially the mortgage was half repayment half interest only, which was subsequently taken to repayment only. It was fixed rate, and we changed as as it was affordable on our salaries to do so.
Looking at other sales in the area, I think we may be relatively lucky and be looking at barely negative equity(but need to get the property valued to check)
As to being able to support the mortgage on my own, yes this should be ok (ca. 3x salary ex bonus) so very lucky in that regard I suppose - my concern is whether I will actually want to remain in the flat once she goes!
She's leaving with her job unfortunately, and the flight date is fixed, so I guess most of this will have to be done remotely!
Solicitors to be called today then!
Posted on 11 February 2010 | Love 0 loves Report
212

SoftwareBear posted
just wondering ... haven't come across the concept before ... a single mortgage that is split into two halves ... one which is interest only .. the other repayment ... ?
Or a single mortgage that was on interest only ... and it now on interest and capital repayment ... ?
Or two mortgages on different terms that have been replaced by a single one on the same terms ?
You cannot have a mortgage on capital repayment only ... unless you lender is very generous/stupid ... or the rate is zero % .. but technically still interest and repayment.
Posted on 11 February 2010 | Love 1 love Report
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kalbery posted
The former - a mortgage split into half where one half was interest only with no capital repayment and the other half a typical repayment style. Was with Principality Building society.
Just took one phone call to consolidate the two parts into one repayment mortgage after ca. 1 year (and no fee) so worked out pretty well.
Posted on 11 February 2010 | Love 0 loves Report
85

ckm4328 posted
Software Bear - They used to do these not sure if they do anymore. I was offered one by Halifax half interest only half repayment. I was tempted because I liked the idea of trying to invest to beat the performance of house prices but wasn't that confident.
Posted on 11 February 2010 | Love 0 loves Report
212

SoftwareBear posted
So you paid interest on the whole mortgage anyway ... but repaid on a schedule based on half the mortgage.
Were the two halves on different interest rates ?
Did this have a special name they used to describe it ?
Posted on 11 February 2010 | Love 0 loves Report
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kalbery posted
Essentially yes. If we'd continuted for the 25yr period would have half the capital outstanding to be repaid in a lump sum. Same fixed rate on both - not sure if you could have separated them in this one. I arranged it through an independent broker, and don't think there was a special name above him calling it a half interest only, half repayment mortgage!
Posted on 11 February 2010 | Love 0 loves Report
212

SoftwareBear posted
cool ... glad I'm not going crazy ... 8-)
Posted on 11 February 2010 | Love 0 loves Report
804

MikeGG1 posted
5% was yours. 95% mortgage was shared equally, so 47.5% each.
The total split is therefore 52.5% yours and 47.5% hers, less half the mortgage each.
You are going to have big problems getting a replacement mortgage because there is now a 10% minimum and there is only one salary to support it.
Get the property valued and check what might be possible, mortgage-wise. Tim@lovemoney.com might help. There are several different variables here so get the aspects into perspective and in writing so that you can show her.
It might be that she would sign away her rights if there is no equity left in her portion, so that you don't have to re-arrange the mortgage until matters have improved.
The furniture would be a relatively simple matter. At 3 years old, I would suggest that you offer her 25% of the original cost. In other words assume everything is now worth 50% of its original value and her share would be half of that. That would be more than would be obtainable if selling but it would be worth more than that to you.
Whatever happens you need legal advice and more than 2 weeks in which to do it.
SB Half & half or two thirds one third mortgages were quite common in the days before the crash. It was a way to keep the cost down, while still paying off some capital.
Mike
Posted on 11 February 2010 | Love 0 loves Report
212

SoftwareBear posted
I think I probably ignored them as it wasn't really any benefit to interest only that allowed capital repayments ... except maybe the rates ... but they were already off my radar at that time anyway.
Posted on 11 February 2010 | Love 0 loves Report
410

manzanilla posted
You have two problems - agreeing a fair split with your girlfriend and getting the lender to take her name off the mortgage.
Unless you can EASILY justify the size of the mortgage on your salary alone (think 3X multiple or better) then it is likely that the mortgage company will simply refuse to take her name off it. In which case the only way to disentangle your affairs is to sell the house :(
FWIW, if you put down the whole deposit and there is now little or no equity, then I don't think you owe her anything. Sure she has been paying half the mortgage, but effectively that has been her rent for the last three years.
I would agree with Mike that a 25% offer for the furniture sounds reasonable.
manzanilla
Posted on 11 February 2010 | Love 1 love Report
21

iPension posted
If you put down the deposit and the property is worth less than you paid then she would owe you half the loss. If she abandons you and stops paying half the mortgage (which she appears to be doing) then she does not have strong grounds for asking for a share because her theoretical share will quickly disappear with her unpaid interest.
You do need to take legal advice on this and shouldn't be rushed into reaching a compromise. Even if it is your fault she is leaving it is only fair to her that a proper agreement is reached. I have seen situations like this go horribly wrong and cause years of resentment. You are going to a Solicitor because you don't understand the legal position enough to make your own decision without guidance. It is not a divorce but the ramifications can be almost as painful if it is not handled properly.
Posted on 16 February 2010 | Love 1 love Report
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kalbery posted
Thanks everyone for your input - all very helpful and objective. Will seek legal advice this week!
Also, had a first valuation (with the estate agents that mediated the last sale) and (according to them anyway)because of the improvements we have done to it, coupled with the lack of sellers, they would market it @ 399,950 - so ca. £15k more than purchase, which is nice, even if we likely wouldn't get that.
Have another valuation this evening and then will call solicitor and mortgage lender to see where I stand on that side....
Posted on 16 February 2010 | Love 0 loves Report

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