Transfer of Equity - how much to buy ex out?

[rumanshu]

I recently split up with my partner and we both agreed that I will buy him out of our property, but how much shall I pay him? It was a joint mortgage, and the payments were made by both of us on a regular basis. I have subtracted the remaining mortgage from the flat's current value, and divided it by 2 to come to a lump sum figure. But is that it?? I paid the 10% deposit on my own, and what about stamp duty? Any advice would be appreciated because our solicitor and mortgage lender said the same thing - agree a figure between the two of us!

[panhandle]

It looks like you are about right. Take the current value of the property and deduct the outstanding mortgage and that figure represents the equity. He should be entitled to 50% . However, you may wish to deduct from that amount 50% of both the deposit and Stamp Duty that you say you paid plus 50% of any ancilliary expenses that you may incurr to make the change.

But at the end of the day it all boils down to what you agree between you. What can he afford and what will you accept?

Try and keep it amicable and good luck to you both.

[Didwot]

Irrespective of what you contributed to the purchase price, if you purchased as Joint Tenants then you are entitled to half each, and if you purchased as Tenants in Common then you are entitled to whatever shares you agreed at the time of purchase.
In calculating what your partner is entitled to, do not forget that the only way you and they can ultimately get hold of the equity is to sell the property. Therefore if you buy out your ex partner you should bring into account the notional costs of sale (estate agents fees, legal fees, VAT etc) - say 3% of the value of the house.
To do the calculation take a realistic value of the property, deduct the notional costs of sale, take off the cost of redeeming the mortgage (remember to allow for any early redemption penalties) and divide what is left by two (or the appropriate proportions if Tenants in Common).
For negotiaing purposes you can offer whatever you like, but the above gives you the "fair" answer.

[MarkyP05]

Hey rumanshu, this is not in answer to this question - just trying to get in contact with you about a an answer you posted a while back regarding marketing jobs. hope you get this my email is [email protected]