Refinancing After Separation – How to Buy Out a Partner and Keep the Home

Refinancing After Separation – How to Buy Out a Partner and Keep the Home

Separation is stressful enough without the added pressure of deciding what happens to the home. The good news? Refinancing can allow one partner to buy the other out, keep stability for the family and move forward with clarity.

This guide breaks down how the process works, what lenders look for and how to protect yourself financially during the transition.

1️⃣ What Does “Buying Out a Partner” Mean?

A buyout is when one person keeps the home and pays the other their share of the equity.
It usually involves:

• Refinancing the existing mortgage into one person’s name.
• Releasing funds (equity) to pay the other partner their agreed entitlement.
• Removing the outgoing partner from the home loan and title.

Refinancing makes this all possible without needing to sell the property.

2️⃣ How Much Equity Do You Need?

Equity is the key to keeping the home after separation. A typical buyout calculation looks like:

(Property value – loan balance) ÷ 2 = partner’s share

You’ll need enough equity to:

• Cover your partner’s payout amount.
• Keep your loan under the lender’s LVR limit (usually 80%).

If your LVR is slightly higher, some lenders still have flexible options.

3️⃣ What Lenders Look For During a Separation Refinance

Lenders are mainly assessing whether you can afford the new loan alone. They check:

• Your income: PAYG, self-employed or government support.
• Your expenses: Updated post-separation budget.
• Your dependants: Children and childcare costs.
• Your credit history: Including past repayment behaviour.
• Your equity: The value of the home after breakup.

Don’t worry if your finances changed recently — lenders expect that during separation.

4️⃣ How the Buyout Refinancing Process Works

The steps are simple when broken down:

• 1. Order a valuation to confirm the property’s current market value.
• 2. Agree on the equity split (often via legal advice or mediation).
• 3. Apply for a new loan in the remaining partner’s name only.
• 4. Settlement — lender pays out the partner being bought out.
• 5. Title transfer — the home is legally moved into one name.

With the right support, this can be completed in a few weeks.

5️⃣ What If One Partner Wants to Keep the Home but Can’t Qualify Alone?

There are alternatives:

• Guarantor support (temporary or long-term).
• Reducing the payout amount if both parties agree.
• Using child support or maintenance as income (accepted by some lenders).
• Debt consolidation to reduce liabilities.

A broker can assess real borrowing capacity based on your new circumstances.

6️⃣ What If You’re Not Ready to Finalise the Buyout?

Some couples prefer to:

• Hold the property for a short period.
• Rent it out until finances stabilise.
• Sell later when the market is stronger.

A roadmap that gives breathing room is sometimes the best option.

7️⃣ How to Protect Yourself Financially During Separation

A few key steps can prevent stress later:

• Freeze or close joint credit accounts.
• Redirect income into a new personal account.
• Set up a fair repayment arrangement until the refinance settles.
• Document any verbal agreements in writing.

Clarity is the best defence during an emotional time.

8️⃣ When Selling Might Be the Better Choice

Even though keeping the home is ideal, selling may be the right move if:

• The buyout amount is too high.
• One partner can’t service the loan alone.
• The property needs major repairs.
• Both parties want a clean financial break.

A refinance comparison will help you see the full picture before deciding.

🔟 The Smartest Way to Handle a Separation Refinance

A broker can help you:

• Assess your borrowing capacity as a solo applicant.
• Structure the buyout so it’s financially manageable.
• Work with lenders who understand separation scenarios.
• Coordinate valuation, settlement and title transfer smoothly.