Need help with buying ex-partner out of a mortgage

Any general questions you might have in regards to loans and finance.
Sarah
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Joined: Mon Jun 24, 2019 6:20 pm

Need help with buying ex-partner out of a mortgage

Postby Sarah » Mon Jun 24, 2019 6:23 pm

We bought a house together 5 years ago and we’ve decided to go our separate ways. The mortgage is with CBA. My solicitor has advised me that unless I can pay off his share, the house is likely to be sold at auction. I would like to keep the house. I need to buy out my ex-partner (ex-husband) out of the mortgage. Is there another lender that can help here?

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Otto Dargan
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Re: Need help with buying ex-partner out of a mortgage

Postby Otto Dargan » Mon Jun 24, 2019 6:50 pm

Hello Sarah. Welcome to the forums.

Yes, you can buy out your ex-partner out of the mortgage. However, you’ll need to qualify for the mortgage on your own. If you qualify then:
  • You can refinance and extend your mortgage to 95% of the property value.
  • You can increase your home loan to pay out a divorce settlement.
  • Your mortgage broker can get you a better interest rate when refinancing.
  • You must meet standard bank policies without your partner’s income.
  • You may have to pay Lenders Mortgage Insurance (LMI) if you borrow more than 80% of the property value.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a home loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Sarah
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Joined: Mon Jun 24, 2019 6:20 pm

Re: Need help with buying ex-partner out of a mortgage

Postby Sarah » Mon Jun 24, 2019 7:30 pm

If I were to add my new husband on the mortgage, do we have to pay LMI again if we stayed with the same lender? Can the LMI be transferred across?

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Otto Dargan
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Need help with buying ex-partner out of a mortgage

Postby Otto Dargan » Mon Jun 24, 2019 7:58 pm

Hi Sarah,

It depends on the lender but typically when a borrower wishes to be removed from both the loan and security and be replaced with a new partner/borrower, then the LMI already paid can only be transferred across where there is no new borrowings and the Loan to Value Ratio (LVR) is not greater than the original approval. If new funds are required and/or the LVR is greater than the originally approved LMI already paid cannot be transferred across.

In your case, a new LMI policy may need to be taken out so, it may be better to shop around for a better interest rate and a cheaper LMI premium instead of staying with the same lender.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Michelle P
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Joined: Mon Jun 24, 2019 8:01 pm

Re: Need help with buying ex-partner out of a mortgage

Postby Michelle P » Mon Jun 24, 2019 8:04 pm

Hi there, I also have a question. Is it possible to remove a partner’s name from a fixed rate loan without incurring early repayment adjustment?

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Otto Dargan
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Posts: 7657
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Need help with buying ex-partner out of a mortgage

Postby Otto Dargan » Mon Jun 24, 2019 9:38 pm

Hi Michelle P,

Removing a borrower’s name from a fixed rate loan without incurring early repayment adjustment or break fees can only be considered if the borrower is going through a divorce/marital separation. It can allow you to alter the home loan without incurring a substantial cost if a new loan is written. You’ll need to apply for a refinance of your home loan with your current lender.

In most cases, it’s the same cost to refinance your mortgage and pay the break fees as it is to continue paying a higher rate until the end of the fixed rate term.

For example, if you fixed your loan at 9.00%, you have one year left on your fixed rate and banks are currently offering rates of 6.00% then paying a break fee may make you reconsider refinancing.

However, if you’re paying a higher rate for the next year, when you do the math, it usually means that over the next year you pay the same amount in additional interest as you’d have paid in a break fee.

For this reason, it normally makes sense to refinance or sell your property if you need to do so but it doesn’t make sense to refinance if you’re just trying to save money.

A specialist mortgage broker can help you through the process when removing a partner’s name from a fixed rate loan.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a refinance.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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