How do I buy someone out of a house?

If you and your partner are joint tenants in a house, you both co-own the house entirely. Accordingly, you would both have to agree to either sell the house or change your ownership structure to tenants in common before one of you can sell your share of the property. Also, if one of you dies, the entire property is inherited by the other partner as per the rights of survivorship. If you are tenants in common, one of you can directly buy out the other’s share of the property without needing to change the ownership structure. However, changing the ownership does not automatically transfer the full liability for the mortgage to the new owner.

Suppose you and your partner are joint tenants, but you agree to become tenants in common sharing the property equally so that you can buy out your partner. You can then approach your mortgage lender to discuss the new ownership, and check if you qualify for the mortgage on your own. Your lender may also request a property valuation, which can help you estimate the amount you need to pay your partner to buy them out of the property. If you don’t qualify to take on the current mortgage by yourself, you could try to refinance the mortgage with another lender. 

When buying your partner out of the property - and the mortgage - you would also have to consider your partner’s share of property-related expenses such as council fees, maintenance, and home insurance. Note that this would also be the case if you were tenants in common before deciding to sell your home and share what you get for it based on how much each of you paid. 

The primary advantage of a joint home loan is that lenders consider the cosigners’ combined borrowing power when assessing the loan amount. If you and your partner were to apply individually for the same loan, the lender may tell you that you don’t have sufficient income, savings, or credit score to qualify for it. Also, if you end up separating but neither of you takes charge of repaying the home loan, the lender could report both of you as defaulters, making it difficult for either of you to borrow money in the future. 

Suppose you and your partner separate, and they want to keep the house. Even if they have the means to repay you and continue making mortgage repayments, the lender won’t agree to remove you from the loan agreement and would require them to undergo a full assessment for a fresh loan. 

A formally signed agreement detailing how one of you has bought out the other partner from the mortgage through refinancing the loan would help avoid any further disputes as well. Consider getting legal advice about such a settlement, even if you don’t disagree with your partner about dividing the property. You may need to do so, particularly if you are undergoing a divorce that may involve a court proceeding at some point.