Last updated: July 2026 · Reviewed by John Pierre Saliba, Director and Mortgage Broker, MFAA Accredited
Buying Out Your Ex-Partner, How It Works
When a relationship ends and one partner wants to keep the family home, the process involves two things happening simultaneously: buying out your ex-partner's share of the equity, and refinancing the existing joint mortgage into your name only. This is one of the most sensitive and time-pressured lending situations we deal with, and getting the finance right is critical to keeping the settlement on track.
The most common problem I see is one partner discovering at the last minute that they can't service the mortgage alone on their single income. This needs to be assessed at the very start of the negotiation, not after a consent order has been signed. Understanding your borrowing capacity on a single income before the settlement is finalised gives you real negotiating power and prevents a very stressful situation becoming impossible.
Step-by-Step: How a Partner Buyout Works
- Step 1, Agree on property value: Both parties agree on the property's current market value, usually confirmed by an independent valuation or two real estate appraisals. This determines each partner's equity share.
- Step 2, Calculate the buyout amount: Your ex-partner's share = (Property value − Outstanding mortgage) × Their ownership percentage. Example: $1,200,000 property, $600,000 mortgage, equal ownership = $300,000 buyout.
- Step 3, Assess single-income borrowing capacity: We run a full assessment of what you can borrow on your income alone, including the existing mortgage balance plus the buyout amount.
- Step 4, Apply for refinance: New loan = existing mortgage balance + buyout payment. Application is in your name only. Lender assesses on your single income.
- Step 5, Settlement and title transfer: On settlement of the refinance, your ex-partner is paid out and removed from the title. Transfer of title is usually exempt from stamp duty under family law provisions in most states.
Worked Example: Buying Out Ex-Partner in Sydney
- Property value: $1,400,000
- Existing joint mortgage: $650,000
- Net equity: $750,000 (split equally = $375,000 each)
- Buyout payment to ex-partner: $375,000
- New loan required: $650,000 (existing) + $375,000 (buyout) = $1,025,000
- LVR: $1,025,000 / $1,400,000 = 73%, no LMI
- Your income: $130,000 p.a.
- Estimated borrowing capacity at $130K: ~$750,000–$850,000 depending on lender
- Gap: $175,000–$275,000, options include negotiating a lower buyout, accessing equity differently, or using a guarantor
Stamp Duty on Partner Buyouts
In most Australian states, transfer of property between separating spouses or de facto partners under a court order or financial agreement is exempt from stamp duty. This is a significant saving, on a $1.4M property, stamp duty would otherwise be $58,000+ in NSW. We advise confirming the exemption with your solicitor early in the process, as the exact conditions vary by state.
What If You Can't Afford the Mortgage Alone?
- Negotiate a lower buyout: If the property is worth more than you can borrow against, negotiating the buyout amount down (or agreeing to sell) may be necessary
- Family guarantee: A parent acting as guarantor can boost your effective borrowing capacity and eliminate LMI
- Increase income evidence: Secondary income (rental, overtime, investment) counted by some lenders
- Sell and split: Sometimes the cleanest outcome, we help structure finance for your next purchase
