How to Buy Someone Out of a House in the UK in 2022

Are you sharing a mortgage with a friend, family member, spouse, or partner, and one of you has decided to move out?

Buying someone out of a mortgage in the UK is not a complicated process regardless of your situation.

Below, we explain how to buy someone out of a house under different circumstances!

What Is a Mortgage Buyout?

So what exactly is a mortgage buyout? The process of buying someone out of a house involves at least one owner of a property purchasing the equity share of the other owner(s). 

By doing so, the co-owner(s) are released from the mortgage, and their name(s) are removed from any documents related to the property, including the title deeds.

The Steps to Buying Someone Out of a Mortgage

Depending on your exact circumstances, the steps to buying out other owners might vary to a degree, but generally, they include the following:

1. Contact a mortgage advisor;
2. Determine the market value of the property;
3. Calculate the outstanding principal on the mortgage;
4. Multiply the outstanding principal by the market value to get the purchase price;
5. Negotiate a deal with the seller;
6. Get a loan to cover the purchase price;
7. Close on the property.

When it comes to refinancing for buying out a jointly owned property, you have several options at your disposal: from getting a loan from a family member to remortgaging. Ultimately, your financial situation and the amount you need will determine how you raise money.

Getting a Mortgage to Buy Out Siblings in the UK

If you and your siblings have inherited property following the death of your parent, you can become the sole owner by buying their shares.

However, the details surrounding the purchase will vary based on your intentions. For instance, if the house is already mortgaged, you could take out a second mortgage to cover the transfer of equity and continue paying the original mortgage.

Then again, if you are not planning to live in the house, you could go for a buy-to-let mortgage that will allow you to buy out the other siblings and cover the mortgage repayments by renting out the property.

Buying a Partner Out of a Joint Mortgage in the UK

Deciding what happens to the home you shared with an ex-partner after a divorce or a partnership dissolution is a critical financial decision. If buying your ex-partner out of the mortgage is your preferred course of action, you should estimate your partner’s share.

How to Calculate Your Partner’s Share in the Property

Figuring out each owner’s share in a property is a fairly straightforward process:

1. Get a property appraisal, either from your lender or other appraisers;
2. Ask your lender for a redemption certificate to figure out how much you owe;
3. Subtract the outstanding mortgage from the total property value;
4. Multiply the result with the percentage of your partner’s beneficial interest.

Note: The financial settlement agreed upon during the divorce will also decide how the property’s equity shares are split between the partners.

Remortgaging as a Way of Buying a Partner Out of a House

One of your best options to buy out your partner’s property shares is applying for another or a different property mortgage, i.e. remortgaging. You can go about this in several ways:

• Remortgaging with the same lender—you can request a so-called ‘product transfer’, or internal remortgage, which will swap your current mortgage for another one (often with better terms);
• Switch your mortgage lender—instead of proceeding with your existing lender, you can borrow from a different institution, which will pay off your previous debt and establish new repayment terms;
• Rent out the property—should you wish to retain the house but live elsewhere, you can apply for a buy-to-let mortgage; that way, you pay off your current debt and your partner’s shares and repay the new mortgage from the property rent.

Note: To determine the best course of action, consult with a mortgage broker who will assess your current circumstances and potentially save you a substantial sum in the long run.

Alternatives to Buying Out Your Partner

Even if you change your mind about buying your partner out of a joint mortgage in the UK, or you cannot afford to do so, you can consider other profitable alternatives, such as:

• Selling the property and splitting the funds after paying off the mortgage;
• Getting help from friends or family in the form of a guarantor mortgage;
• Letting your partner buy you out of the mortgage.

Note: Under certain circumstances (most often when children are involved), you may be unable to sell the property until a particular time, if ordered so by the court.

Bottom Line

If you wonder how to buy someone out of a house, note that you can take several approaches, as explained in the sections above. Ultimately, the best course of action is to get help from mortgage experts who will advise you on the most profitable course of action.