Buying ex out of house

Barr

Hi All


I bought a house with my ex about 8 years ago. We have a joint mortgage , joint life insurance etc.


My ex now lives abroad and wants to be bought out of the house. We have agreed a figure which I will pay to her and in return I will own the house fully.


I assume the bank will be the first port of call. The issue that I have is that we are on a tracker at the moment. I’m afraid if I talk to the bank about me taking over the payments they will try and get rid of the tracker. Would this be possible for them to do ?

Advice welcome

Peanut2011

Hi Op,

What I can tell you is you will need to speak to your bank, they will treat you as a new lender and will asses your income and the rest as a new applicant.

You will also need to speak to your solicitor and have the deeds transferred in your own name as well as have the bank issue a new cheque to him/her.

You will need to close the old life insurance as well and open one in your own name.
Basically the whole process will be as if you are buying a new house on your own.

In reference to the mortgage, does the bank still offer tracker?? If they do not, then you will not have the option of getting one again.

Furthermore regardless if you are the one paying mortgage on your own at the moment they will do the stress test on their own criteria at the moment and they may not even grant you the mortgage.

Speak to your bank and see if you can get one on your own first.

Addle

Unfortunately, if you make any change at all to your mortgage, you'll lose your tracker.

Are you hoping to borrow more? If not, I don't think it's compulsory to inform the bank of the change of ownership.

D3PO

OP you will essentially have to get a new mortgage to buy her out. Which means in essence yes you will lose your tracker.

That is if you actually meet the banks criteria for that mortgage now for a house that I suspect is probably in neg equity. In which case why would you be paying her anything ......

Unless your in a very strong position as a candidate the bank may not want to do this, right now they have a stronger hand if there was a default with two people to go after on the other side by granting you the mortgage they cut their options.

If the house is in equity as you paying your ex something would insinuate again it has cons for the bank to do this for you, as you will probably need a mortgage to cover the payment to your ex plus on top of the current mortgage balance, reducing or removing all their equity protection and also removing one of the libel parties.

Various factors will be at play here, first step is to talk to the bank.

D3PO

Addle wrote: »

Are you hoping to borrow more? If not, I don't think it's compulsory to inform the bank of the change of ownership.

the bank will have the deeds, you cant change ownership without them !!!

Addle

D3PO wrote: »

the bank will have the deeds, you cant change ownership without them !!!

What deeds?

D3PO

Addle wrote: »

What deeds?

Registration of title then. This will list any burdens on the property (mortgage) preventing change of title

Addle

D3PO wrote: »

are you winding me up ?

No. If you're on about Land Certificates, they've had no legal effect for years now.

D3PO

Addle wrote: »

No. If you're on about Land Certificates, they've had no legal effect for years now.

Just think about how stupid your suggestion is.

Your suggesting that I could for example change ownership of my house to my brother without telling the bank.

I could then refuse to pay a penny on my mortgage and the bank would now have no security or way to reposess the house as I no longer own it.

Seriously now think before you type.

Addle

D3PO wrote: »

Registration of title then. This will list any burdens on the property (mortgage) preventing change of title

I don't know what the terms of the mortgage in this case are, maybe he's obliged to inform the bank of a change of ownership, but what's to stop the current owners of executing a deed of transfer and having it registered with land registry?

http://www.prai.ie/eng/Legal_Professional_Customers/Legal_Practices_Procedures/Legal_Office_Notices/Retention_and_Return_of_Land_Certificates_-_Legal_Office_Notice_1_2010.html

Addle

D3PO wrote: »

Just think about how stupid your suggestion is.

Your suggesting that I could for example change ownership of my house to my brother without telling the bank.

I could then refuse to pay a penny on my mortgage and the bank would now have no security or way to reposess the house as I no longer own it.

Seriously now think before you type.

Seriously, it would be your brother that's stupid to buy a house with a mortgage outstanding on it and no undertaking to clear same.

D3PO

Addle wrote: »

I don't know what the terms of the mortgage in this case are, maybe he's obliged to inform the bank of a change of ownership, but what's to stop the current owners of executing a deed of transfer and having it registered with land registry?

http://www.prai.ie/eng/Legal_Professional_Customers/Legal_Practices_Procedures/Legal_Office_Notices/Retention_and_Return_of_Land_Certificates_-_Legal_Office_Notice_1_2010.html

you cannot change title. Its IMPOSSIBLE if there is a charge on the title without the bank releasing the charge.

This is only done when the mortgage is paid off. Which is why essentially the OP has to get a new mortgage.

D3PO

Addle wrote: »

Seriously, it would be your brother that's stupid to buy a house with a mortgage outstanding on it and no undertaking to clear same.

My God its like talking to a brick wall. :rolleyes:

Addle

D3PO wrote: »

you cannot change title. Its IMPOSSIBLE if there is a charge on the title without the bank releasing the charge.

This is only done when the mortgage is paid off. Which is why essentially the OP has to get a new mortgage.

If you say so. I still disagree.

How many developers transferred mortgaged lands to their spouses without informing the pertinent lending institutions?

I'm not saying it's the right thing to do, I'm just saying it can be done.

Ray Palmer

I'm not sure how you buy somebody out in this case. It is likely that the house is in negative equity. So shouldn't the partner be paying money to the person still living there. 300k mortgage split to 150k each say the house was 350k to buy. House now worth 200k mortgage probably 280k or 140k each

What do you buy the other person out with? How much do they pay?

Does the former partner have enough money or ability to get a loan for the outstanding amount? The OP should be giving them less than the 100k for their share due to the complicated nature of getting the equity out of the property and not paying EA fees etc...

Marcusm

Barr wrote: »

Hi All


I bought a house with my ex about 8 years ago. We have a joint mortgage , joint life insurance etc.


My ex now lives abroad and wants to be bought out of the house. We have agreed a figure which I will pay to her and in return I will own the house fully.


I assume the bank will be the first port of call. The issue that I have is that we are on a tracker at the moment. I’m afraid if I talk to the bank about me taking over the payments they will try and get rid of the tracker. Would this be possible for them to do ?

Advice welcome

A few things to consider:

If you're buying your ex out, does that mean the house is worth more than the attached mortgage loan?
What's your relationship with your ex like? Would he/she be willing to operate on a pragmatic basis!

If you have positive equity and a good relationship, it would be worth you and your partner acknowledging that the tracker is a laudable entitlement which you should try not to lose (especially if its for the full mortgage term).

Without the bank's involvement, and what seems likely to be a loss of the tracker, it will not be possible to fully remove your ex from the arrangements. However, it would be possible fr you to contract to purchase your ex's interest in the equity of the house and INDEMNIFY him/her in respect of the loan. It is not a perfect situation but a good solicitor could guide you. It won't free him/her entirely but might leave a bigger pot to share.

Peanut2011

Addle wrote: »

Unfortunately, if you make any change at all to your mortgage, you'll lose your tracker.

Are you hoping to borrow more? If not, I don't think it's compulsory to inform the bank of the change of ownership.

Just to clear any doubt in anyone's mind on this. Your bank has the title of your deeds and until the mortgage is paid off they will not release them.

In order to change any of the ownership details Bank has to agree as that is their collateral if you do not pay the mortgage.

Someone suggested how so many builders did it, well they did it to fully paid or mortgage free properties. What people confuse is the fact the banks are looking to repossess them now.

Reason they are going after them is the fact that they were mentioned in the guarantee for a loan that is not a mortgage on a property....

Anyhow, my fist post is exactly what you must do. Trust me I know, I have done that more than once!

Barr

Thanks for the replies.

Ok so it seems I will lose the tracker if I change the mortgage just to myself and it will be like a new application again (not good)

I also cannot change the house into my name as the bank have the title of deeds.

That leaves me in a bit of a pickle

Barr

Marcusm wrote: »

Without the bank's involvement, and what seems likely to be a loss of the tracker, it will not be possible to fully remove your ex from the arrangements. However, it would be possible fr you to contract to purchase your ex's interest in the equity of the house and INDEMNIFY him/her in respect of the loan. It is not a perfect situation but a good solicitor could guide you. It won't free him/her entirely but might leave a bigger pot to share.

Just to clarify the house is worth more than the mortgage so thats why I’m buying her out. We also still have a good relationship which should help matters

Hi Marcusm, could you just expand a little on the above, I don’t fully understand it. Is this some kind of legal agreement we can put in place and leave the bank out of it completely?

Ray Palmer

Barr wrote: »

Thanks for the replies.

Ok so it seems I will lose the tracker if I change the mortgage just to myself and it will be like a new application again (not good)

I also cannot change the house into my name as the bank have the title of deeds.

That leaves me in a bit of a pickle

Tracker mortgage loss is not good in lots of ways. If you didn't include that calculations you need to go back and talk to her. It will be a large financial commitment to take on. You could be talking a couple of hundred euro now and 3 or 4 hundred in a few years.

Bigcheeze

I suppose if you still have a good relationship you could look at not involving the bank and putting a separate contract in place with 1) you paying her a sum today, 2) you continue to pay the mortgage and 3) her assigning her interests in the property to you at the end of the mortgage term in exchange for 1) and 2)

Obviously a good solicitor would need to draw up this agreement but it's what I would explore.


Edit: I see Marcusm has already suggested something similar.

Honey-ec

Bigcheeze wrote: »

I suppose if you still have a good relationship you could look at not involving the bank and putting a separate contract in place with 1) you paying her a sum today, 2) you continue to pay the mortgage and 3) her assigning her interests in the property to you at the end of the mortgage term in exchange for 1) and 2)

Obviously a good solicitor would need to draw up this agreement but it's what I would explore.

This is exactly what my sister and I did when she bought me out of our house. The solicitor we used to buy the house in the first place did up the agreement for us.

StillWaters

Honey-ec wrote: »

This is exactly what my sister and I did when she bought me out of our house. The solicitor we used to buy the house in the first place did up the agreement for us.

This is what people are in in increasingly doing, however it is not watertight, and you need a solicitor versed in this to protect both parties.

helimachoptor

I would be very interested to see how that would stand up with a judge looking at it.

Which would he deem to have priority, both your contracts with the bank or the legal agreement with your sister.

In the case of your sister not paying the mortgage one would presume the bank would deem you both liable rather than just your sister.

Bigcheeze

Honey-ec wrote: »

This is exactly what my sister and I did when she bought me out of our house. The solicitor we used to buy the house in the first place did up the agreement for us.

Thinking about it more, this scenario must come up frequently. During the property boom lots of young single people were purchasing with their siblings in the belief that they needed to get on the "ladder" as it would be too late when they were ready to settle down with a partner.

Bigcheeze

helimachoptor wrote: »

I would be very interested to see how that would stand up with a judge looking at it.

Which would he deem to have priority, both your contracts with the bank or the legal agreement with your sister.

In the case of your sister not paying the mortgage one would presume the bank would deem you both liable rather than just your sister.

Yes the mortgage would take precedence over the contract. However, in the OP's there is equity in the property so it could be sold to clear the mortgage if problems arose later.

It may start to get funky if the OP remarries and establishes the property as a new family home.

Marcusm

Barr wrote: »

Just to clarify the house is worth more than the mortgage so thats why I’m buying her out. We also still have a good relationship which should help matters

Hi Marcusm, could you just expand a little on the above, I don’t fully understand it. Is this some kind of legal agreement we can put in place and leave the bank out of it completely?

I don't want to stray into anything that might be regarded as legal advice; you need a good solicitor.

The basic point is that your ex can sell what she holds - the beneficial interest in the property subject to the mortgage. In order that you can perfect this later, you or your solicitor would require a long dated power of attorney permitting the execution of formal legal transfer of the legal interest (ie the name on the Land Registry) in the land at a later date when the mortgage is released. She would require you to undertake to pay the mortgage and to indemnify her in the event the bank came back against her. This is not perfect for her as she is still legally responsible for the loan and would need to declare it when looking for other finance. However, it's unlikely that a bank holding a first charge on a property worth in excess of the mortgage would chase a non resident in preference to seeking possession of the property. Your ex would require independent legal advice.

In due course (maybe a year or so), I imagine that you would approach the lending institution establishing that you have been paying the mortgage solo and that you have the beneficial interest in the property and asking them to permit the transfer to be effected without losing the tracker.

There are lots of other issues which could arise especially in the event that you form a new family and occupy the property.

Legal advice, legal advice, legal advice is what you should seek.

L1011

Addle wrote: »

How many developers transferred mortgaged lands to their spouses without informing the pertinent lending institutions?

I'm not saying it's the right thing to do, I'm just saying it can be done.

They didn't. It can't.

Developers transferred their own, unmortgaged, assets which could have been taken to call in personal guarantees - not mortgages.

The_Conductor

OP- how do you reckon that the property isn't in negative equity if you bought it 8 years ago? Did you have a low loan to equity ratio on the mortgage (aka did you part finance the purchase with cash/savings). Its a bit of a stretch of the imagination that it isn't in NE if you bought it 8 years ago.

How did you come up with a mutually agreeable price for the property with your ex? Does it have any basis in the actual recent sale prices of similar property in the vicinity- or is it something that you came up with between you?

Personally- given the limited information given, I would be of the opinion that your ex would owe you money- considering the fall in the value of the property- and the additional cost associated with it (property tax, the fact that you'd be loosing the tracker mortgage etc etc etc)

I'm not sure that you've thought this through properly.

D3PO

The_Conductor wrote: »

OP- how do you reckon that the property isn't in negative equity if you bought it 8 years ago? Did you have a low loan to equity ratio on the mortgage (aka did you part finance the purchase with cash/savings). Its a bit of a stretch of the imagination that it isn't in NE if you bought it 8 years ago.

How did you come up with a mutually agreeable price for the property with your ex? Does it have any basis in the actual recent sale prices of similar property in the vicinity- or is it something that you came up with between you?

Personally- given the limited information given, I would be of the opinion that your ex would owe you money- considering the fall in the value of the property- and the additional cost associated with it (property tax, the fact that you'd be loosing the tracker mortgage etc etc etc)

I'm not sure that you've thought this through properly.

It is possible that they are out of NE although unlikely. My best mate bought 8 years ago and according to the last sale on the Property Price Register the sale was only 2k less than his outstanding mortgage balance (South Dublin, no overpayments made)

Mind you there cant be much equity unless overpayment has been made Id say.

The_Conductor

Or- the LTV of the mortgage at the outset was in the (perhaps) 70 to 80% range (aka there was equity put into the property, aside from the mortgage, at the outset.