Buying, selling or mortgaging a property does require a solicitor or a licensed conveyancer. Their legal services are needed as there are two elements that need to be officially documented and registered.
The first is the ownership of the property. This used to be known as the deeds, or title deeds, and it is how you are registered as an owner. The Land Registry is a government department that holds records for all property and land in in England and Wales.
The second is formally registering the mortgage. A mortgage is a type of secured loan. This means that the lender secures their loan, by placing a charge against your property with the Land Registry. This enables them to repossess the property should you fail to maintain the repayments.
This guide looks at whether you need a solicitor to buy out an ex partner from a property that is mortgaged.
The process of buying someone out
It’s important to remember that everyone named on the current mortgage is jointly liable for the monthly repayments. So even though someone may have already moved out, they are still responsible for maintaining the payments.
Should the payments fall behind, and you then have some mortgage arrears, this will impact the credit status of all parties and is to be avoided if possible.
The process of buying out will have two parts:
The property
Buying out a partner out of a house means you will need their signed agreement to do so. Although this often means paying them out for the part of the property they owned, lots of transfers are done where no money changes hands.
Once agreed, their name will be removed from the property’s title deeds at Land Registry and they will no longer be shown as an owner.
The mortgage
You will need to apply to have the mortgage amended, to remove the ex-partner. This can be done with your existing lender or by using a transfer of equity remortgage.
With both options the lender will need to assess and approve you as the sole borrower. This means looking into your earnings and affordability for the entire mortgage.
Who will need a solicitor?
We all know that solicitors can be expensive. And the longer a legal matter takes to conclude, the higher the legal bill will be.
Even though the buy out may be due to a relationship breakdown, if both parties can agree on the financial side then it will be a lot cheaper.
If the transfer is quite complicated, or if the relationship is no longer amicable, then having separate legal advice is a good idea.
The mortgage part will require a solicitor or conveyancer. Often you will be able to use the lenders solicitor for free or at a reduced rate and this is a popular option.
Do both parties need a solicitor?
The Law Society recommends that both parties should always have their own independent legal advice, to deal with conflicts now, or in the future.
How much is their share worth?
If you’re buying your ex-partner out, it’s common to pay them half of the equity you both have in your home. Although it isn’t always that easy, as you may have contributed more towards the mortgage deposit or vice versa.
The starting point is getting an agreement on what percentage everyone involved ‘owns’ or is entitled to. This is quite straightforward if the property was originally purchased as tenants in common, as each owner will have a specific percentage of ownership documented. Where it was set-up as a joint tenancy, or involves a divorce, the split can be more difficult to determine.
If you are divorcing your spouse you won’t know the share of the equity until the financial settlement is agreed.
For simple cases, or where all parties are in complete agreement, you will need to know:
EQUITY PERCENTAGE
What percentage is each owner entitled to?
These do not all have to be the same. For example one person could have 75% with the other owning 25%.
VALUATION
Obtain a couple of valuations from local estate agents to establish an ‘average’ value for the property.
Alternatively, you could pay for a formal valuation from a chartered surveyor.
OUTSTANDING MORTGAGE
Ask your lender for a redemption statement.
This will be the exact amount needed to repay the loan in full and will include any early repayment charges and closure fees.
Let’s look at a simple example:
| Property value | £450,000 |
| Less mortgage | £200,000 |
| Total equity to be shared | £250,000 |
| 50% ownership | £125,000 each |
How do I pay my partner out of my mortgage?
The most common way is to borrow the extra amount needed, by using a capital raising mortgage.
Continuing with the example above, the person being removed would need to receive £125,000 as their share of the equity.
Buying someone out would need the mortgage to be transferred from joint names to one person (you). You would need to apply for a transfer of equity remortgage for £325,000 (200k + 125k). With a loan to value of 73% this should be achievable with most lenders, but it also depends on your affordability.
Please remember that you will be applying for a new mortgage and will need to be approved by the lender in the usual way. They will look into your income and expenses to determine whether the new amount of £325,000 is affordable for you.
As it’s a remortgage you will be able to choose a new interest rate deal and with the lenders consent, maybe extend the repayment term a little to bring the monthly repayments down.
Let’s take a quick look at how changing the mortgage term affects the repayments:
| Mortgage | Interest rate | Term in years | Monthly payment |
| £325,000 | 5.50% | 20 | £2235 |
| £325,000 | 5.50% | 25 | £1995 |
| £325,000 | 5.50% | 30 | £1845 |
The extra £75,000 would first go to your solicitor who would then pay it over to the ex-partner.
Another option would be to sell the property and split the proceeds.
What if I needed the money urgently?
How long does a transfer of equity take?
Remortgages, even with a transfer of equity, are normally concluded quite quickly in around 4-6 weeks.
If you need access to the extra money earlier then you have a couple of borrowing options. Bear in mind that all the while your partner is still associated with the property you will need their agreement and signature for any secured borrowing.
The fastest ways of borrowing money against a house are:
SECURED LOAN
These are also known as second charge loans. They are more expensive than a normal mortgage but generally pay out quite quickly. You will need to demonstrate affordability of the repayments.
BRIDGING LOAN
This is a good example of how a bridging loan can help. It’s possible for a bridging loan to payout in 7-10 days, so quite quick. There’s less reliance on your income situation and credit profile. However, the lender will only go to around 75% LTV.
If this route is needed you will need to get a legal agreement between all involved parties.
Either of the two loans above would be repaid as soon as the remortgage completes and the additional borrowing is released.
Can you remortgage and add a name?
If you currently own your home by yourself, you may be wondering if you can remortgage to add someone else’s name to the mortgage. This could be a partner or a friend.
The quick answer is yes you can.
So do you need a solicitor to buy out your partner?
Yes and no!
You certainly don’t have to use a solicitor. If this is too expensive or you both feel it’s unnecessary then you can proceed without one.
Legal advice will be needed for complicated cases or where the two sides simply cannot agree on a settlement. Having everything drawn up now in a legal agreement should prevent issues occurring in the future.
You should seek mortgage advice from an independent mortgage broker. As well as the remortgage side of the transaction, they will also be familiar with transfers of equity, how the process works and the related mortgage fees.
