Divorce is a stressful process. With complex financial knots to untangle, some assume that it’s just a case of splitting things down the middle. But there is also the joint mortgage to consider. Unfortunately, it isn’t always a simple case of removing one name from the mortgage and transferring it to the other partner.
Divorce in the UK
Nearly half of marriages in the UK end in divorce, with the age group most commonly affected being 45 to 49, according to legal divorce specialists @Crisp_co. There are all kinds of things that need to be resolved, one of which is the joint mortgage. There are several steps you should take.
1. What you MUST do: Carry on paying the mortgage
When you signed up for the joint mortgage, you both agreed to be equally liable for the debt until it is paid off and not just when you are living in the property. Therefore, you both should continue paying the mortgage.
2. Contact your mortgage lender
Lenders are usually sympathetic to separating or divorcing couples and will do their best to help you. If you are struggling to keep up with repayments or your spouse is refusing to pay, the sooner you contact your lender for help, the better.
3. Working out the best options
There are several options when it comes to dividing property, equity and your mortgage after a divorce:
Sell– some couples decide to sell the property to cut financial ties. This has its benefits. Not only does it release you from each other financially, you could also buy a more affordable property of your own.
Continue to pay your existing mortgage– another option is to effectively do nothing. On your divorce, you may both continue to pay the joint mortgage. This may be the better solution if you have a fixed rate mortgage and it would be too costly to move it elsewhere.
Keeping the property– if you intend to remain living in your property, it may be possible to transfer it to sole ownership. But this may not be clear cut.
Divorce and mortgage affordability
Keeping the property can make sense, especially if you will remain living in the family home with your children. However, like all mortgage applicants, you will need to pass an affordability test.
What this means is that you will need to prove to the bank that you are able to afford repayments on the new mortgage. Don’t forget, you will be buying out your partner too, meaning that you could be looking at a mortgage too cumbersome to be supported by your own income.
If you are borrowing money to buy your partner’s share, this additional borrowing will be included in your affordability check.
Discussing your mortgage options
It may be possible to remortgage your home solely in your name. There are many mortgage products coming to the market, some of which may well be suitable. Divorce brings significant changes in all aspects of life, including your finances.
As your financial circumstances change, it’s good to get honest, reliable and expert advice on all aspects including divorce and how it affects your mortgage. Our mortgage experts are here to help – why not contact us to find out more?
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