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What Happens To Your Mortgage During A Divorce?

We have covered a number of other aspects relating to divorce which can be found in our Guides section. Here, we will be taking a look at the topic surrounding divorce and mortgages.

If you have a joint mortgage but are divorcing, there are a number of options for you to explore:

Selling The Property

This offers you a clean and amicable break, giving you both peace of mind when the property is sold that the mortgage is paid off.

Buying Out Your Ex-partner

By taking on the other half of your mortgage, you can continue living in the property while your ex-partner moves out.

Keeping A Stake In the Property

This option sees one party stay in the house while the other leaves, while holding a monetary stake in the property. When the property is sold, the stake-holder will receive a lump payment.

Continue With Payments

If both you and your ex-partner contribute to the mortgage payments and you have both nearly paid it off in its entirety, you may find that it is easier for everyone involved to simply keep paying it until the terms are complete. This is particularly helpful for fixed-term mortgages where you may be charged for early repayment.

Coming to this decision and agreeing on it might take some time. What will work best for you may not work well for your ex-partner. This is why during these conversations, and indeed every other conversation you have during this time, you need to remain amicable and respectful as hard as that may be.

If you believe that you will struggle to come to a mutually beneficial resolution, you should inform your bank and mortgage lender immediately.

While you are going through this legal process, you are still required to make your mortgage payments. Although it may vary from lender to lender, being in arrears of three months of mortgage payments can very often lead to property repossession. Contacting your bank and mortgage provider at the earliest convenience can offer you some breathing space as they are likely to be sympathetic to your situation, potentially offering a brief pause on your payments.

Failure to keep up with your payments or having your property repossessed will impact yours and your partner’s credit history. This is one of many reasons you should ensure that communication is efficient, clear and respectful.

Divorcing While In Debt

If you are in the position where you and your ex-partner had more outgoings than income, divorcing and splitting your mortgage may prove to be more difficult.

When you are in negative equity (when your mortgage is worth more than the value of your home), coming to a mutually beneficial conclusion may seem like a far cry. Invariably, you may both have to split the debt and pay off half each.

If your divorce proceedings are amicable, you may find it suitable to wait for property prices to increase and then sell. As always, it pays to handle matters in a mutually respectful manner.

If you are in negative equity and are divorcing, you must speak to a legal advisor or a mortgage advisor to discuss your best course of action. 

Applying For A New Mortgage After Divorce

When buying out your ex-partner’s share of the mortgage, you take on the responsibility of payment and have their name removed from the deed. Once this “transfer of equity” has occurred, you will then begin to pay the full mortgage by yourself. Typically, this would require you to borrow more which might not be an option. As always, it is best to discuss with your mortgage lender to determine your options.

Depending on which course of action you take with your existing mortgage, applying for a new mortgage is likely to be your next step.

If your ex-partner has taken on the mortgage or you have decided to sell the property and start fresh, applying for a new mortgage by yourself can seem intimidating. Now is the perfect time to start getting yourself organised.

The process is no different to normal, however due to the impact that the divorce will have on your finances, this will be factored into the lender’s consideration. There is also a good chance that your divorce will need to be finalised before any mortgage applications get approved.

If you can prove that you will be able to afford the payments and provide the necessary documentation to the lender, there should be nothing stopping your application from getting approved, allowing you to start with a new slate.

The process of a relationship breaking up is never easy and often painful. The best way through this, though, is respectful communication and being patient. If you can make your ex-partner’s life easier, they should be able to return the favour and get through the process efficiently and cleanly.

You should also discuss all matters with your mortgage lender and bank. We mentioned it before but talking to them as soon as possible will save you a great deal of stress and money in the long run.

If selling your home is the decision you and your former partner come to, Spring can help you avoid any additional stresses by buying your home quickly and easily. The stresses usually attached to a traditional house sale such as prolonged negotiations, conveyancing delays as well as viewings are all removed with Spring. Our dedicated team can guide you through your options and be on hand from your first contact.

To find out how we may be able to help you through your property sale, contact us at [email protected] and a member of our property team will be on hand to take you through.
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