Wednesday 30 August 2017

How does getting divorced impact your mortgage

Author: Editorial Team


Getting divorced is stressful enough without worrying about a mortgage to pay off. Read on for our professional advice about what happens to your mortgage after a divorce – and what you can do to ease the anxiety and financial burden.

Getting divorced: what happens if the mortgage isn’t paid off?

If you’ve taken out a mortgage with your partner, then you are both responsible for paying off the debt. This does not change even if one of you is no longer living in the property. Legally you are both responsible for paying off the debt. If one of you refuses to pay mortgage bill payments, both of you will suffer poorer credit score ratings. This is also true if you are late on your mortgage payments, or if one party completely refuses to pay. In addition, it may mean that you lose the house.

What are our options?

For the above reasons, it’s important to discuss your mortgage with your ex-partner and hopefully come to a suitable arrangement that means mortgage payments are still being met. If you have children together, one partner may be happy to continue to live in and pay for the home. Alternatively, you may choose for one partner to buy the other out.

If an agreement cannot be reached, you could also choose to sell your old home. The divorcing couple can split the proceeds of a sale and then use the funds to purchase new homes. This approach may also help you to make a fresh start and to build new memories in a new home, rather than being reminded of any potentially difficult feelings or memories from living in the home you shared together.

An alternative option is to choose to agree to a financial settlement, in which you transfer part of the value of the property from one partner to the other. The partner who gave up a share of their ownership rights would keep a stake or ‘interest’ in the home. This means that when it is sold he or she will receive a percentage of its value.

Look to the courts

You can also turn to the courts for advice, as The Money Advice Service highlights:

“A court in England or Wales can defer the sale of the home through what’s called a ‘Mesher’ order. This can put off the sale of the home until a specific event triggers the sale – for example, the youngest child turns 17 or 18. The net sale proceeds are then divided in accordance with the court order. A court can also use a ‘Martin’ order to defer the sale of the house, but importantly it gives one person an entitlement to occupy the property for life or until remarriage. This is most often used where the couple don’t have children and the other person does not immediately need the money to put towards their own needs.”

Contact the bank

To help ease your stress and worries over your mortgage payments you should also contact your bank to let them know that you are getting divorced. Banks will sometimes provide separating couples with “payment holidays” in order to lessen the new financial strain on them.

Easing the stress

The prospect of organising how to handle your mortgage with an ex-partner can seem daunting. These simple tips should help ease some of the stress. Once you have discussed your concerns and potential options with your ex, things should feel a lot less overwhelming. As always, communication is key.

For more advice, check out our website.

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Written by: Editorial Team