buying ex out of house?????

B

bilbob

Guest
Bought a house with ex 4 years ago, since split up and want best way to buy her out of property. House worth 450k mortgage 310k, so willing to offer her 75k, was thinking of switching morgages (for free) with Ulster bank to extend the term and reduce the payments, increase mortgage by 75k and have it in my name- is this feasible?

Also can u switch mortgage providers if u have a fixed mortgage?
 
If it's a 50:50 ownership then surely you must pay her half the market value (i.e. €225K) even if she will use some of this to clear her share of the mortgage? If you actually pay €75K for her share of the house worth €225 then other taxes (e.g. gift tax etc.) could come into play. Your solicitor should be able to advise on how to approach this buy out.

If you switch mortgage type/providers with a fixed rate then you will most likely be charged early breakage penalty charges by the original lender.
 
Surely Clubman it's neater if he just pays her half the payments made so far, perhaps compensates say half the amount of Stamp Duty she'll have to pay for a new property as she's lost her FTB status, and thereafter assumes full responsibility for paying the remainder of the mortgage?
 
It may be neater from an administrative point of view but I'm just pointing out that Revenue may not see it that way and may see the payment of €75K for a house share worth €225K as a (gift) taxable event. Best to get independent, professional advice from a solicitor and/or tax advisor.
 
How is that fair to your ex 75K I know I would not accept that as payment for a house worth 450K.
Why should she not benifit from the profits of the rise in capital. I cannot imagine she would accept this type of figure......
 
I presume it's based on the fact that the house is worth €450K and there is a mortgage of €310K outstanding so €450K - €310K = €140K / 2 = €70K.
 
I assume they were paying the mortgage back at their normal rate, i.e. no extra payments were made. If that's the case, then the vast majority of the €310k mortgage still exists. The paper gain is what, say €110 (assuming €310 is a 92% mortgage so they probably paid something in the region of €340k). So his partner is being offered €55k for the paper gain (which could turn to dust if he tries to sell in say a year's time) plus another €20k for her share of the already-paid mortgage repayments.

Without knowing the ins and outs of it this seems on the face of it to be pretty reasonable.

Edited to apologise for crossing posts with clubman above!
 
Mortgage outstanding is 310, current value is 450, equity/2 is 75k. which she is happy with, I’m just wondering the best way to transfer ownership.
 
I didn't either at first but managed to delete my first post in time to avoid too much embarassment! ;)
 
Hello Bilbob,

You would be better off switching to a new lender Ulster bank and EBS offer this free of chanrge at the moment, if you are in a fixed rate, you may not have to pay a penality, if that rate on offer now is more than what you are on, i.e. your fixed rate 3.5 for 2 years is now 3.7 for 2 years. You should speak to your lender and they will tell you if you have any penality to pay, The amount you are paying your ex off with seems very fair, I hope you have got legal advice for the amount to pay. I hope it all goes well.

Regards
Catherine

info@keatingfinancial.com
 
Sherman said:
perhaps compensates say half the amount of Stamp Duty she'll have to pay for a new property as she's lost her FTB status,
Click to expand...

This point seems to have been lost - I'm wondering what people think of this?
 
I think that is correct - the FTB status will be lost unless it involved a married couple who were separating/divorcing. See the FTB section on .
 
Hi Clubman,
I was actually wondering what AAMers thought of the idea of compensating her for the Stamp Duty and loss of FTB status....After all, she has been living there and that's just the way the cookie crumbles. Why should bilbob compensate her? After all if he buys another house, he won't have FTB status either.
 
On the same point, he will face an immediate stamp duty on the half share which he is now buying from the ex.

I think that in these situations, the "price" should reflect the likely net sale proceeds each party would get if the house were sold.
 
Having just done this very thing - it's not as simple as just giving your ex-girlfriend half the equity. You cannot just top up the existing mortgage, you will need to remortgage in order to take her name off the existing mortgage (assuming it is a joint mortgage). There will be stamp duty payable due to the amounts involved, valuations need to be performed to verify the figure of €450 etc etc. It works out as complicated as buying the house in the first place and you will have to pay solicitors fees which will be a % of the half-house you are buying.

You can switch mortgage providers when fixed but a breakage fee will be payable. This is also be payable if you need to remortgage. (We split the breakage fee 50%).
 
Went through this recently myself. Note that the person hanging on to the property is NOT liable to stamp duty on the half they are buying. My solicitor was not aware of this and i had to push him on it.
 
HI Kar100,

Can you give me more information on the stamp duty part? My parents are hoping to do the same. And the solicitor said that we will have to pay half of the stamp duty.

Please advice.
 
"Note that the person hanging on to the property is NOT liable to stamp duty on the half they are buying."

As a general proposition, not true I am afraid. The person hanging on to the house is not, (of course), liable to stamp duty on the half that they already owned, but the half share being acquired is a stampable transaction;

However, if the gross value of the house is less than €254k, then the one half interest being required is less than €127k, and therefore exempt from stamp duty.
 
Am in a slightly different kind of predicament. I am buying a house (490K) and my father's name has to go on the deeds, although the house will be for my use only. If I was to buy him out in a couple of years, would I have to pay stamp duty on the transfer. I know that it is a reduced stamp duty amount (50% between father and son) but I am wondering if I will still have to pay it anyway??
 
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