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How Is Home Buyout Calculated

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  • 18-07-2022
How Is Home Buyout Calculated

How to Calculate a House Buyout In a Divorce

Deciding how best to split and deal with your shared home as a separated couple can be incredibly challenging, especially if you're not on the best terms.  One of the most popular options is you can opt to buy the remaining share your partner has on the current mortgage; this is more formally known as a divorce house buyout.

However, it's best to know that this isn't your only option. We encourage you to speak with your divorce attorney, broker, estate agent or those professionals in your local area. 

These individuals can help you navigate and manage divorce buyout prices and the overall process in a quick fashion to allow you, your ex-spouses and any potential children in the mix to move on peacefully and promptly. 

Kent Property Witness offer RICS expert witness surveyor services for Tonbridge and Kent. We discuss: How to calculate a house buyout in a divorce.

What are my options with our house after a divorce?

During a process such as a divorce, you have three essential options when splitting up the value of your home. 

However, before rushing ahead to decide what you wish to do with your home, we highly recommend you speak with a local attorney or ensure you have authorisation from the Financial Conduct Authority before proceeding.


No matter your attorney's advice, the first step is to receive a home appraisal from a real estate appraiser. The home appraisal provides you with an idea of the home's current value on the market, ultimately making it far easier to calculate how much equity you will owe your ex-spouse if you sell the home and split the profits or buy them out. 

Community property state: If you live in community property, all existing debts and assets accumulated in your marriage get evenly divided 50/50, meaning if both of you purchased the home before marriage, these might be excluded; however, ensure you talk this through with your attorney.

Equitable distribution state: For those that cannot agree with the legal counsel or their ex-spouse on the future of the home, the judge will decide on the distribution of the marital property. 

 Buy out your ex-spouse's share of the equity.

Typically, you and your ex-partner will have built up a substantial equity cost with your current home, as you have owned it together. For those that purchased the household together, you often split the ex's equity equally. When purchasing your exes equity, you'll pay for the other's share of the house or property.

Equity is known as the value of the home you own, specifically your portion. When beginning to pay your existing mortgage, the bank your with will hold the majority of the equity; the more mortgage you pay off, the more equity you will have. Divorcing couples must figure out the equity of their current home and decide how best to split it. 

 Refinance the other's share of the mortgage and then buy out the home.

You can choose to refinance your mortgage for those who do not have the money to fully support the decision to buy out your former spouse's share of the property. 

In refinancing your household, you begin by cashing out all the shared equity you have collectively built up; you will use this to buy their portion of the home.

Refinancing is a process also that can eliminate your ex-spouse's name from your collective mortgage, meaning they will no longer be legally obligated or responsible to continue making payments. Even if you discover you have the money to buy out one partner's equity, you may still want to refinance for this reason.

However, keep in mind that you must ensure you have the correct amount of income to qualify for a single person mortgage to refinance, as many fail to achieve this. 

According to the ownership rights, you may have to sell your marital home at this stage unless you can come to a collective arrangement on your co-owned home.

Don't forget to calculate all the closing costs it will take to maintain your home on your own if you manage to qualify for a new mortgage. 

You'll have to curate a smart financial plan for each aspect, including paying the utility bills and cutting the lawn; whilst these may appear inexpensive, they'll all add up, especially when paying by yourself. 

 Sell and split the proceeds.

Suppose neither you nor your ex-spouse have a particular connection to the property and wish to start again separately in another property. 

If you don't have the money to buy the other out of the home, the best option may be to sell it and retrieve the proceeds. Once retrieving the proceeds, you can curate an even split and share it between the two of you.

You must remember that even if you don't want to sell but cannot agree on how best to divide the house, the court settling your divorce may order you to have it sold. 

Contact experienced, knowledgeable real estate agents in your area; many can help your ex-partner and yourself get the most out of the marital home. They'll ensure they sell it as fast as possible, at a reasonable broker's fee, so that separated couples can continue into the next chapter of their lives. 


How to approach dividing your asset when you own a house together

Divorce can bring both partners plenty of emotional upheavals, especially when children are involved; however, one of the more practical sides is that all couples must face financial hurdles when they choose to break up their marriage.

They must work out how best to divide their assets and savings, alongside calculating who will buy who out of the marital household.

Regardless of how friendly and civilised the relationship between you and your previous partner is currently, buying them out of their home can be an exceptionally overwhelming and complex course.

It's a job that requires you to think appropriately about each of the individual financial options available to you and your partner, carefully assessing what you are both entitled to.

Choosing who will keep the marital home is an incredibly emotive decision when going through a difficult time such as a divorce; it is your biggest collective asset, and there many potential solutions.

Many divorcees often sell the home, splitting each of the proceeds so that they can move on individually to new properties and live separate lives.

However, such is only the case when both partners decide they do not want to stay in the marital home or neither can afford to buy the other out of the property. 

How is home buyout calculated in a divorce?

How is a house buyout calculated in a divorce?

Once you and your partner have decided how best your assets will be divided amongst you, you can begin calculating the percentage of your home's entire value and what it will equate to. 

One of the aspects you must start with is determining how much your home is worth overall; once this is established, you can move on to calculate your current equity. Your home's equity is essentially its value with any debts like a joint mortgage against it. 

For example: Suppose you have a worth of approximately £250,000, and all of your assets collectively are being split 50/50. To buy your spouse's share of your home, you may need £125,000 if you choose to stay at that specific property.

However, if you find yourself paying off your mortgage to this day, your equity could be much lower, and therefore you could require spousal support to bear the costs of living.

For example: Suppose your home is worth around £250,000, and your assets are given an equal, 50/50 split, yet you still have a £100,000 mortgage on the property; the property's equity will only amount to £75,000 for each partner. Ultimately, the calculation is £250,000 - £100,000 ÷ 2.

If you struggle, you'll be able to find accessible divorce buyout calculators online. Such could mean that you require less money to buy out your partner's share of the house; however, you may find that you're contributing more to the overall mortgage funds and interest in the future. 

What is the process of buying someone out of a house?

Whether you consider yourself tenants in common or joint tenants or a household or property, you must buy out the person that wishes to leave the property.

It can be a more straightforward process if there are just two of you. However, if there are up to four collective tenants in common, at least one or all owners can choose to purchase the leaving party's mortgage share, successfully dividing it between the remaining co-owners. 

Such is the case when you are severally or jointly liable for the household or property mortgage. So, if one party leaves the premises for good without being bought out, you may still be considered liable for their share of monthly repayments on the old mortgage. 


How easy is it to buy someone out of a mortgage?

When buying someone out of a house, like your ex-partner, you will need to buy the other owner's share of your collective property whilst also taking over their mortgage share. It's paramount that you ensure your partner's name is completely removed from your house's title deed through a transfer of equity.

You'll then have to look into perhaps a product transfer, which will allow you to keep the current lender instead of going through the process of getting a new lender, or you can have the entire property remortgaged. If you have tenants in common moving into the home, you can choose to split the equity and mortgage between the two of you.

If you have the financial means to do so, you could begin by removing their name from the mortgage and then buy their equity, ultimately making you solely liable for each part of the home and its finances.Doing so is what is meant by a product transfer, of which you will receive a mortgage redemption certificate.

On the other hand, you may be able to use remortgaging as a way to buy someone out of a house; you can do so by adding the equity of the other party to the final mortgage cost. You will then owe the lender the full amount of all remaining mortgage costs, alongside the other party's equity value.

However, to choose either of these avenues, you must have the capacity to borrow the extra money you require or have it at hand unless you require a second mortgage. You may have to be tested by the mortgage lender so they can assess your eligibility for the loan with affordability checks.  

Do you need a RICS valuation for divorce? Our expert witness surveyor can provide matrimonial house valuation following a divorce. 

Contact us and give us a call about any information or advice about matrimonial property valuation for Kent, London and South England.