Buyouts, renegotiation, bridging loans
Buyout of the equalisation payment and release from joint liability: keeping the property and taking over the loan alone
Equalisation payment, transfer duty, bank consent, deadlines: what you need to arrange to keep the property and take over the loan alone after a separation.
Keeping the property and taking over the loan alone involves two operations: buying out the other party’s share through a notary, via an equalisation payment calculated on the value of the property minus the outstanding capital, and obtaining a release from joint liability from the bank. This is never automatic: neither a divorce judgment nor an agreement between the parties imposes it on the lender, who verifies that the remaining party can bear the loan alone.
By Sandy MASCART, mandataire d'intermédiaire en opérations de banque et en services de paiement ORIAS 26000541 sous le mandat de CDV PATRIMOINE & ASSURANCE (ORIAS 14005573)
Key points
- The equalisation payment is calculated on the net value of the property, minus the outstanding capital, and then apportioned according to each party’s rights.
- The division of a jointly owned property is subject to a registration duty distinct from the notary’s fees, depending on the couple’s status.
- Release from joint liability is a decision by the bank, never automatic: a divorce judgment does not release any of the borrowers.
- The bank may refuse the release without giving a reason: strengthening the file, having the loan refinanced elsewhere or selling remain the available options.
- Only the bank’s written consent granting the release from joint liability provides lasting protection: neither the judgment nor the agreement replaces it.
Taking over a property purchased jointly on your own means buying out the other party’s share at the notary and obtaining the release of the joint liability from the bank. The latter is never automatic and often requires a loan buyout.
An agreement between you, even if signed, is not enforceable against the lender: consult the bank early.
Calculating the equalisation payment: a two-step formula
The sum paid to the departing party: the net value of the property, less the outstanding capital, distributed according to each party’s rights.
- Net value = property value − outstanding capital on the loan.
- Equalisation payment = net value × share belonging to the departing party.
First, establish the property value (by agreement or expert valuation) and the outstanding capital as of a specific date. The notary adjusts the figures according to the shares recorded in the deed, the initial contributions and the financing of the instalments; a lawyer will decide if the disagreement persists.
The partition duty: budget for it in advance
A registration duty on the net shared assets, plus the notary’s fees: the most frequent surprise.
The reduced rate applies after a divorce, a legal separation or the dissolution of a civil partnership. Cohabiting partners pay the full rate.
- Taux de droit commun 2,50 %
- Taux après séparation de corps, divorce ou rupture de PACS 1,10 %
Assis sur l'actif net partagé. Le régime applicable dépend de la situation : à confirmer avec le notaire chargé de l'acte.
- En vigueur depuis le
- Source
- Article 746 du code général des impôts — Légifrance
A new mortgage also incurs costs: what each guarantee really costs.
Une composante parmi d'autres du coût d'une hypothèque, assise sur le montant de la créance garantie. Ce n'est pas le coût de la garantie.
- En vigueur depuis le
- Source
- Légifrance
Complete budget: equalisation payment, partition duty, deed, financing and guarantee.
Discharge from joint liability: the waiver only the lender grants
A written discharge from the lender, neither automatic nor a matter of right: no court can impose it.
Without it, you both remain liable. The person leaving may be pursued in the event of default, and the loan weighs on their future borrowing capacity.
On the insurance side, the new cover is processed as a new application: the shares in a couple. In the event of death: insurance and succession.
The lender checks that the person remaining can service the loan on a single income.
Le plafond ne change pas ; c'est son dénominateur qui se réduit de moitié. C'est là que se joue la plupart des refus de désolidarisation.
- En vigueur depuis le
- Source
- Décision D-HCSF-2021-7, art. 1er — Légifrance
See the debt-to-income ratio, the capacity of a couple and the instalment formula.
Present the post-separation budget
- The pension paid, counted as an expense.
- The pension received, not always taken into account in full: the income taken into account.
- The children's housing in shared custody.
- The loans from the joint life, to be handled with the mortgage.
Present these expenses yourself, with supporting documents.
Lender refusal: three ways to unblock the assumption
Strengthen the file, have the loan refinanced elsewhere, or sell.
To strengthen: equity, extended term, guarantee from a third party, settled loans. Refinancing elsewhere makes the loan a new financing: the profitability of a refinancing, the release of a mortgage.
Keeping the existing loan or starting a single contract
The equalisation payment is financed by a new loan, added to the assumed capital.
Favourable original rate? Keep it and add a supplementary loan. Otherwise, a single contract resets the term. Compare the total cost, not the instalment.
The complete process, and what delays each step
The solicitor, the bank and the separation proceed in parallel: the slowest dictates the pace.
| Step | Counterpart | Most frequent cause of delay |
|---|---|---|
| Agreement on the property value | Both parties, an expert if necessary | Disagreement on the price |
| Settlement statement and draft deed | Solicitor | Waiting for civil status and title documents |
| Application for release from joint liability | The bank | An incomplete financing file |
| Assessment of the financing | The bank | Income and expenditure evidence |
| Signing of the partition deed | Solicitor | Availability of the parties |
The solicitor prepares the deed, the bank decides on the release, and the judge intervenes in the absence of agreement. The mortgage intermediary prepares the financing file, without legal advice.
Property held in a company or in unequal shares: what changes
In a civil partnership, it is a transfer of shares. In an unequal co-ownership, the equalisation payment follows the shares in the deed.
In both cases, the loan is handled separately.
When selling is better than buying out
- The income of the person remaining does not support the loan alone.
- The net value is low: modest equalisation payment, full fees.
- The property no longer suits: selling quickly means paying the fees twice.
The document that protects you for years
The written confirmation from the lender granting the discharge, in your name, including the loan number. Nothing replaces it: request it at the time of signing.
Before the appointment with the notary? Create your file or submit the buy-to-let project by telephone.
Sources
Read next
- Mortgage rates in Lyon: current rates by loan term
- Borrowing as a couple: the true calculation of your joint borrowing capacity, and how to protect each partner Borrowing as a couple: what the bank actually adds up, what it examines next, and how to protect an unequal contribution in the deed.
- Renegotiating your mortgage or having it refinanced: the calculation that tells you whether it is worthwhile Renegotiating or refinancing your mortgage is only worthwhile if the interest saved exceeds all costs. The method in six lines, and when to abstain.
- Mortgage insurance share: 100/100 or 50/50, how to choose as a couple What remains due to the survivor depending on the chosen split, the overlooked effect on sickness benefit, and a decision grid based on the income gap.
- Separation or divorce with a mortgage running: who pays what, and what to tell the bank? Until the bank signs, you both remain liable for the whole loan. What to arrange as soon as you separate, and the order of the decisions after that.
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Passer au calcul : Borrowing capacity