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Separating from your partner, and getting divorced, can be a difficult and stressful time. What happens with the home you shared, and probably bought together, can often cause quite a financial headache.
Our knowledgeable, friendly team of mortgage advisers at PIL Southampton is here to guide you sensitively through the process and to ease your burden at this tough time.
Let’s look at some of the questions we are often asked in this situation.
There is no fixed rule. It will be up to you and your ex-spouse to decide on the solution that works best for your circumstances.
It might be that you want to keep the property so that your children can continue to live there, or one of you may simply want to stay in that house.
If you do decide that one of you is going to keep the property rather than sell it, you will need to appoint a licenced conveyancer to transfer ownership of the property into that individual’s name.
Your mortgage lender will need to be satisfied that the person taking sole ownership of the property can afford the mortgage repayments before removing the other from the mortgage. Alternative lenders could be considered if affordability is questioned.
As soon as you decide to separate, if you have a joint mortgage you must tell your mortgage lender straightaway. This is especially important if you feel that your change in circumstances could affect your ability to meet your mortgage repayments.
Lenders are often sympathetic to couples in this situation, and may offer you a payment holiday to ease financial strain in the short term.
Many people believe that all a couple’s assets, including their home, are divided up 50/50. This may be the case, but it isn’t a hard and fast rule – courts can decide that your assets should be split differently, depending on your individual circumstances like each partner’s economic situation, current and predicted earning potential, and for childcare reasons.
If one person wants to sell their jointly-owned marital home and the other doesn’t, the person who wants to sell has to go to court with an action of Division and Sale.
The other party can appeal to the court for a share of the proceeds, or to purchase the property at either its market value or a value agreed by the court.
The court also has the power to sanction the property’s sale if the other partner can’t be contacted, or if medical reasons are preventing the other partner from accepting the sale.
Regardless of whether you are still living in the property, or whether you are separated or divorced, both partners who have taken out the joint mortgage are still liable for the mortgage payments.
It might be that you are on good terms and you decide to continue to pay the joint mortgage between you after the divorce, if you can both afford to do so.
In this situation, you might need to set up a Mesher Order through the courts, which will stipulate that the property can’t be sold until after a specific event or date, for example when your youngest child finishes their full-time education.
If, however, you decide you no longer want to share a joint mortgage, you have two options.
You can either sell your property, which will hopefully give you enough equity to pay off the mortgage, splitting whatever proceeds are left to help you both move on to alternative accommodation.
Or, you can transfer the joint mortgage to you or your ex-spouse, so that one of you is the sole mortgage holder. This is referred to as a transfer of equity. To do this, the partner remortgaging to their sole name would have to prove they could afford to take on the repayments by themselves.
Note: Your name cannot be taken off a joint mortgage without your permission. Both people named in the joint mortgage must sign paperwork removing one of you from the mortgage and, even if you both agree to this change, the mortgage lender will only allow the change if they are satisfied that the sole mortgage holder meets their lending criteria and can afford the mortgage payments.
If your property is in negative equity when you are getting divorced, the proceeds from the sale of the house will not be enough to pay your mortgage off in full.
It might be that you can come to an arrangement with your mortgage lender, or you may both need to take out a loan to cover the shortfall in the mortgage.
Alternatively, if your property is in negative equity, it could be a good time for one ex-spouse to buy the other’s share, which could be a more achievable proposition if property prices are lower at that time.
It is wise to discuss your options with an experienced mortgage adviser like the team at PIL Southampton.
Not being named on your marital home’s mortgage or title deeds does not mean that you have no claim or rights to the property when you get divorced.
In UK law, the marital home is considered a joint asset, and neither partner can force the other to leave.
If your name is not on the mortgage or the deeds for the property, you can protect your share of the property and prevent your partner from selling the home without involving you, by registering your matrimonial rights through the Land Registry.
Do be aware, though, that if your partner owned the property before you were married, you are likely to have little or no claim to that property when you get divorced – it will be defined as a ‘pre-marital’ asset that will be treated separately to joint finances and may not be included in the matrimonial pot.
It depends on your own personal circumstances. If you don’t have children, you may prefer to have a clean break and sell your property, or one of you may be in a position to buy the other person out.
If you have children, you may choose to keep the family home so the children don’t have to move.
With any big financial decision, you should always take independent legal advice.
Your marital home is not the only significant asset that you will need to consider when you get divorced.
Pensions can often be a bigger financial asset than the property you shared, and you also need to factor in any savings and investments, shares, ISAs and so on.
On the other side of the financial coin, you will also need to take into account any debts, like car finance agreements, loans and outstanding credit card balances.
If you and your ex-spouse can’t agree on what to do about the marital home, or who should get what, you may have to go to court.
Going to court is unlikely to result in a ruling of a 50/50 split of assets. Courts will take a variety of factors and circumstances into account and, if children are involved, their welfare will be the courts’ priority.
Taking the legal route to resolve a property dispute in a divorce is inevitably going to be costly and time consuming. You might find that using a third party, like a mediator, could be an effective and less costly alternative.
It can be harder to get a mortgage application approved if you are still named on the joint mortgage of your marital home, and even harder if your ex-spouse is failing to keep up the mortgage payments on that home.
Some lenders refuse a mortgage application from an individual connected to another mortgage, which is why an expert like one of PIL’s experienced and qualified mortgage brokers can be very useful in finding a lender who will understand and accept your circumstances, and find you the best deal possible.
We understand that divorce can be a difficult time for people, and deciding what to do about your marital home, and your mortgage on it, can be complex to navigate.
We will support you throughout the process, getting to know you and your circumstances, then take that information and combine it with our comprehensive knowledge of the current mortgage market to find the most appropriate mortgage deal to suit your needs.
Our expert mortgage advisers are here to guide you through the mortgage process, every step of the way. You can email us, fill out the contact form on our website or call us on 02380 668407. We look forward to hearing from you.
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