Positive Equity - joint mortgage splitting up

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Krukakruka

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Myself and unfortunately my now ex only recently switched mortgage providers and signed into a 5 year fixed rate in November and have just under 20 years remaining.

Bought for 230K in 2014
Original mortgage 213K over 25yrs
Remortgage Amount (we had 55K work done and had our house loan consolidated): 211K remaining - 3 monthly payments made (it's a very sudden breakup)
Current value: 310K (valued in Sept) to 350K approximately

We've never been behind on bills, we have no dependents. Neither have loans or credit cards or cars. My ex wants to sell immediately and move on.

I've had a bereavement and should hopefully be coming into inheritance of hopefully 20-40K depending on the housing market (a house will be sold and I'll get a share of the proceeds). I do not know exactly when that will happen.

We're 50/50 joint owners and although one had a higher deposit, the difference is being repaid in monthly installments. There is nothing legally written down about the deposit discrepancy or repayments. We're both decent people and a word of mouth agreement was always going to be sufficient. All of the household outgoings come from this person's private current account.

I have zero savings due to the previous financial strain prior to remortgaging. I earn €33K pre tax. They have approx 10K savings and earn €40K pre tax.

I'm just wondering how much exactly would be required for either of us to buy each other out. The house is in a very sought after area and it will definitely be sold quickly if needed. Personally, I've no family and I'm from the area so I'd prefer to live in the house and buy them out.

Any help during this difficult time would be greatly appreciated
 
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You won't get a mortgage for the balance to buy your ex out at the moment. Unfortunately you don't earn enough.

If you want to stay living there you could reach an agreement on you paying them rent perhaps as well as your share of the mortgage. This would be a strain on your current income I think.

In the medium term you might be able to buy her out: between your inheritance, you maybe earning more and the mortgage being paid down.


This would all be very messy. Especially if your ex meets someone else and wants the equity to buy with them.
 
You will not be lent the money to buy your ex out and considering they want to move on immediately then you have very limited options.

If the property is sold you will both walk away with circa 55k each assuming it sells for 330k (Break fee/solicitors/estate agents costs circa 10k). I would recommend that whatever the balance owed between you and your ex for the deposit is settled at this point.

The 55k combined with your inheritance will give you a hefty deposit to consider a property purchase on your own.
 
Thank you both so much for your replies.

Out of curiosity, how much of a deposit would either of us require should we wish to buy out each other based on a salary of €33K and €40K pre tax?
 
Krukakruka said:
Thank you both so much for your replies.

Out of curiosity, how much of a deposit would either of us require should we wish to buy out each other based on a salary of €33K and €40K pre tax?
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Assume you own it 50/50. Your share of the mortgage is 211k/2=105.5k and your share of the equity is (330-211k)/2=59.5k.

Essentially you need a new mortgage in your own name. It will be the €211k in your own name and another €59.5k to give your ex their equity share, so €270.5k in total.

As you have no savings you would be looking for a 100% €270.5k mortgage on a salary of €33k. No bank will lend to you on this basis. The sums look a bit better when your inheritance comes through, but you still won't get a mortgage to buy your ex out.


If you want a complete and clean break the best thing to do is sell, take your equity and wait til your inheritance comes through. If you want to buy outside Dublin a two-bed apartment should be affordable with a mortgage of about €100k and your equity+inheritance.


PS: your ex won't get a mortgage either to buy you out on their salary.
 
NoRegretsCoyote said:
As you have no savings you would be looking for a 100%
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No, but it's academic.
Krukakruka said:
Current value: 310K (valued in Sept) to 350K approximately
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Deposit is irrelevant.

Neither of you have high enough salary to get mortgage in own name, or for current lender to allow removal of 2nd name from mortgage.

@NoRegretsCoyote is correct, sell the house, take your share of the equity, and move on with your life.
 
In order for either party to buy the other out they would need to pay them Roughly 60k. (assuming value of 330k)

They would then require to take on the debt associated with the house of €211k.

Amount required = €271k

The max mortgage for the 33k earner is €115,500. @ 3.5 rules

The max mortgage for the 40k earner is €140,000. @ 3.5 rules

The 33k earner would need a deposit of €155,500 & the 40k earner would need a 131k deposit. Each party will also require further cash to cover the legal costs of the transfer.
 
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