Keeping the House After Separation: How to Buy Out Your Ex-Partner in Australia
Going through a separation and want to keep the house? How to buy out your ex-partner, what lenders look at on one income, the costs to plan for, and how I turned my own separation into a fresh start.
Separating is hard enough without worrying about where you'll live. For many people, the biggest question is simple: can I keep the house?
I've been through a separation myself, so I know how overwhelming this stage can feel. At the time, it felt like a setback. Looking back, I came out of it stronger. I bought out my ex-partner and kept the home. Then I used the equity to buy two investment properties, one in NSW and one in South Australia. After that, COVID hit, and the properties did really well.
That experience changed my career. I realised how good it felt to be financially free, with a solid asset base behind me, and I wanted to help other people get there too. It's a big part of why I started Mortgages Plus.
The point is this: separation doesn't have to end your property plans. With the right structure, it can be a fresh start.
The good news is that buying out your ex-partner is often possible, even on one income, if you understand how lenders view your situation and get the steps in order.
This guide covers your options, how lenders assess you, the costs to plan for, the mistakes that trip people up, and what to do if you'd both rather start again.
Your options for the family home
Most separating couples end up with one of three outcomes:
- One person keeps the house. You arrange a home loan refinance into your sole name and pay your ex-partner their share of the equity.
- You sell and split the proceeds. Simpler, and sometimes the right call if neither of you can afford the property alone.
- You keep co-owning for now. Some couples hold the property until the kids finish school or the market improves. It can work, but it keeps you financially tied together, so get the agreement in writing.
If you want to keep the house, the key question is whether a lender will let you carry the loan on your own.
Can you afford it on one income?
This is where the right lender makes the biggest difference. Policies vary a lot, so a loan one bank declines can be approved by another.
Income lenders may count
- Your salary or business income. Self-employed? Some lenders accept low doc options. See how to get the best home loan.
- Child support. Many lenders will count it if it's formally assessed or set out in an agreement, regularly received, and the children are young enough that it will continue for a reasonable time.
- Spousal maintenance. Usually accepted if it's documented and ongoing.
- Family Tax Benefit and other government payments. Some lenders include these, often with conditions.
What works against you
- Living costs. Lenders assess your expenses as a single household, including the cost of raising children.
- Joint debts. Credit cards, car loans, and loans still in both names count against you until they're closed or refinanced.
- The buy-out amount. Your new loan usually has to cover the existing mortgage plus your ex-partner's share of the equity, so the loan often goes up.
If the numbers are tight, there are often ways to make it work: a longer loan term, a family guarantor, or a lender with more generous policy on your type of income. A good broker knows there are additional options.
A worked example
Say you and your ex-partner own a home on the Northern Beaches worth $2.4 million, with $900,000 still owing. That leaves $1.5 million in equity. If you agree on a 50/50 split, your ex-partner's share is $750,000.
To keep the house, your new loan needs to cover:
- the existing $900,000 mortgage, plus
- the $750,000 owed to your ex-partner
That's a new loan of about $1.65 million, in your name only, at roughly 69% of the property's value. The lender will want to see that your income alone can carry it, after your living costs. For a rough idea of your own numbers, try my borrowing power calculator.
This is the catch at Beaches prices. Equity is often strong, but servicing a large loan on one income is hard. That's why the choice of lender, and how your income is presented, matters so much here.
Figures are illustrative only and exclude costs.
How a buy-out refinance works
1. Talk to a broker early. Before you agree on numbers, find out what you can actually borrow on your own, ideally with a pre-approval. It changes what's realistic to negotiate.
2. Get a valuation. The property's value sets how much equity there is to split. A broker can often arrange a lender valuation without cost.
3. Agree on the split. Work this out with your lawyer or mediator, then formalise it. Lenders usually want to see consent orders or a binding financial agreement before they release funds.
4. Apply for the new loan. The new loan pays out the joint mortgage and pays your ex-partner their share. It's in your name only.
5. Settle and transfer the title. Your ex-partner comes off the title and the old loan, and the property is yours.
Getting the order right matters. Many people agree on a settlement figure first, then find out they can't borrow enough to pay it.
Watch the time limits. If you need the court to make property orders, married couples generally have 12 months from when the divorce order takes effect, and de facto couples have two years from separation. Your lawyer can confirm how this applies to you. See Legal Aid NSW.
Costs to plan for
• Stamp duty (transfer duty). In NSW, transferring your ex-partner's share to you after a relationship breakdown may be exempt from transfer duty. Conditions apply, so confirm with your lawyer how to document the transfer. See Revenue NSW.
• Capital gains tax. When a share of the home passes to you as part of a relationship breakdown, CGT is generally rolled over rather than triggered at the transfer. If it has always been the main residence, the exemption usually still applies when you eventually sell. See the ATO's guidance.
• Lender's mortgage insurance (LMI). If the new loan is more than 80% of the property's value, LMI may apply. Some professions qualify for LMI waivers, including home loans for doctors, lawyers and accountants, so it’s worth checking.
• Legal and loan costs. Budget for legal fees, discharge fees on the old loan, and any setup fees on the new one.
Tax and duty rules depend on your circumstances, so check with your lawyer and accountant before you sign.
Moving on: buying again after separation
Keeping the house isn't the only fresh start. Sometimes the best outcome is for both of you to sell and buy again separately.
We recently helped a separated couple do exactly that. They sold the family home, and each bought a new property in Western Australia, each with their own loan suited to their new situation. Two buyers, two separate applications, and both moved forward.
If you're heading down this path, a few things help:
• Get pre-approved before you sell. Knowing what you can each borrow makes it easier to agree on the split.
• Plan for timing. Settlement funds usually need the property settlement finalised, so line up the sale and purchases carefully.
• Buying interstate is fine. A broker can lend across Australia, so you're not limited to where you used to live.
• Think long term. As I found, your equity can become the foundation for your next home, or even an investment portfolio. Read more on using home equity to invest.
Common traps to avoid
• Agreeing on a figure before checking your borrowing power. You can't un-agree easily. Check first.
• Leaving joint debts open. A forgotten joint credit card can cut your borrowing power. Close or split them early.
• Missing repayments during the separation. Arrears on the joint loan hurt both credit files and make refinancing harder. Agree on who pays what in the meantime.
• Assuming your current bank will help. Your existing lender may not have the best policy for your new situation. See my refinancing guide. Compare before you commit.
• Forgetting about the redraw or offset. Money in a joint offset or redraw can be withdrawn by either party. Talk to your lawyer about protecting it.
• Trying to do it all at once. Emotions run high. Having a broker and a lawyer each handle their part takes a lot of pressure off you.
Frequently asked questions
Can I just take my ex-partner's name off the mortgage? Usually not. Most lenders treat removing a borrower as a new application, so you'll need to show you can afford the loan on your own. In many cases it's simpler to refinance.
Do I need a court order before I can refinance? Most lenders want the settlement formalised, through consent orders or a binding financial agreement, before they release funds. You can still get pre-approved earlier, which helps you negotiate.
Will child support count as income? Often, yes, if it's formally documented and regularly received. Each lender has its own rules, so this is where shopping around pays off.
How long does it take? The loan itself can move quickly once your paperwork is ready. The legal side usually takes longer, so start the finance conversation early.
Can I keep the house if I'm self-employed? Yes, it's possible. Some lenders accept BAS, accountant letters or bank statements instead of full tax returns.
Talk it through
If you're going through a separation and want to know whether you can keep the house, let's have a confidential chat. I'll look at what you can borrow on your own and which lenders suit your situation, so you can negotiate with real numbers.
Disclaimer: This article is general information only and doesn't take into account your personal circumstances. It isn't legal, tax or financial advice. Speak with a family lawyer and accountant about your situation. Chris Dodson trading as Mortgages Plus is Credit Representative No. 50855 of AMAG, Australian Credit Licence 388570.
Sources
• Revenue NSW: family transfers
