Going through a divorce is a difficult time in anyone’s life. As well as separating from their former partner emotionally, couples going through a divorce also need to separate from each other financially. In most cases, married people will have joint bank accounts, joint insurance policies and, of course, joint mortgages. Thinking about these financial commitments early on in the divorce process will help to prevent the separation from becoming even more complicated.
If you’re currently going through a divorce and trying to work out what it means for your mortgage, take a look at our guide to the ins and outs of financial separation.
Your commitment to your mortgage
As @moneycouk says, “when two people take out a joint mortgage, both agree to be equally liable for the debt until the mortgage is paid off, not just while you live in the property.” This means that you can’t simply stop paying your mortgage, even if you move out of the family home. If either you or your partner did refuse to make the repayments, it would damage both of your credit ratings and potentially put your property at risk.
Get in touch with your lender
It’s important to get in touch with your mortgage provider as soon as you know you and your partner are separating. This is especially important if the change in your living circumstances is going to make it difficult for you to keep up with your repayments. You’ll often find that lenders are sympathetic to couples going through divorce. After all, 42% of UK marriages end in divorce and 34% of couples will separate before their 20th anniversary. In some cases, banks are willing to offer couples payment holidays to help ease the financial pressure of divorce.
Working out what to do next
The next thing you’ll need to do is come to an agreement with your ex-partner about what to do with the property. Often, one person will stay in the family home while the other moves out. If you decide this is the best course of action for you, you have two main options regarding your mortgage. Either you can both keep paying the mortgage for the foreseeable future (this option is often chosen when children remain living in the family home) or one person can buy the other out of the property and become the sole owner. If this is the path you go down, the partner staying in the property will need to buy the other out and acquire a new mortgage in their name only.
In some cases couples can also agree to transfer the majority of the family home into one person’s name while the other keeps an ‘interest’ in the property. They would then receive a percentage of its value in any future sale.
Getting expert advice
Getting in touch with an experienced mortgage advisor as soon as you separate from your partner is the best way to keep financial disruption to a minimum. To find out more, or to speak to one of the members of our expert team, get in touch today.
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Written by: Editorial Team