Going through a divorce or separation is stressful at the best of times, but also having to manage your joint finances and mortgage can make things especially overwhelming. It’s completely understandable to have concerns about what’s going to happen to your home, and fortunately there are many options available when it comes to making arrangements for your joint mortgage when separating from your partner.
Whether you’re considering buying them out or selling the property and splitting the proceeds, this article will go through everything you need to know to help you and your ex-partner agree to an amicable arrangement and remove as much stress from the process as possible.
What happens to a joint mortgage when you divorce?
Having a joint mortgage with your partner means that each person owns an equal share of the property. If you split up or divorce, you both have the right to keep living there, however it also means you’re both equally responsible for the mortgage repayments, even after separation.
As soon as you know you’re getting divorced, speak to your mortgage provider. Providers are often sympathetic when you’re going through personal difficulties and may be able to support you by offering some form of repayment relief or payment date extension. It’s worth bearing in mind though that ‘mortgage payment holidays’ often appear as late or even missed payments on your credit file, which can make other lenders unwilling to consider your application further down the line. So whilst delaying your payments might help your current situation, you should always check what the long-term effects are with your lender before you accept.
Even if your mortgage lender will offer support where possible, from your mortgage provider’s point of view, your divorce doesn’t matter. Both parties signed the joint mortgage contract, so you will therefore both remain liable for paying it as if you were still together.
You can continue paying off the mortgage together if you wish, whether you both live in the house or just one party lives in the house. It’s important to remember that no matter what happens, as long as both names are still on the mortgage, you are both liable for the mortgage until it has been paid off in full – regardless of whether you still live in the property, or what the status of your relationship is.
Divorce mortgage payments after separation
We know that divorce/separation can be an emotional time, but it’s crucial to keep on top of your mortgage repayments, even when you’re still working through the details and deciding which route you want to go down. Falling behind on your mortgage payments will negatively impact both of your credit scores because while both of your names are still on the mortgage, you will still be financially linked.
If you are concerned you might miss mortgage payments, speak to your lender as soon as possible to explain the situation.
How to get your name off mortgage after separation
If you are the one moving out of the home, you may wish to take your name off the mortgage so that it’s easier for you to get another one.
However, it’s important to get reassurance that this won’t mean you lose out on your share of the property. Similarly, if you’re staying in the home and your ex wants to take their name off the mortgage, you’ll need to review your finances and make sure you can continue to pay the mortgage on your own. It’s important to speak to a Family Law specialist or Citizens Advice so that you know your rights before you make any decisions. We would also recommend speaking to your mortgage lender or mortgage adviser to talk through your options.
There are very few circumstances in which you can be removed from your joint mortgage without permission, usually only very extreme circumstances. The only time your ex-partner can have you removed from the mortgage without your consent is if they were granted a court order to have you removed from the title deeds (and the mortgage).
If you do choose to remain on the mortgage, any new application will be treated as a ‘second residential’ purchase, meaning the lender will need you to prove you can afford both mortgages. For most people, this means it’s unlikely that you would be approved for another mortgage until you’re clear of the old one.
What happens to the property during divorce?
If you’re going through a divorce with an ex-partner, there are a few different ways the property can be shared out:
Sell the property
This is usually the most straightforward option as it allows you to pay off the mortgage and release your money (and any equity you have in the home) freeing you up to buy somewhere else separately. This is only likely to work if the equity you can free up is enough to provide both of you with a deposit large enough to buy again.
However, if your children want to keep living there and you want to minimise disruption to the family, then this may not be your preferred choice.
Make it part of the settlement
It can be arranged that one of you keeps the house, while the other receives other assets from the marriage to the equivalent value.
Let the court decide
If you can’t come to an agreement between the two of you, the court can decide for you. If there are children involved, the judge will usually choose the option that causes as little disruption for them as possible. You’ll have to apply for a financial order, so it’s a good idea to seek legal advice to guide you through this process.
One owner buys the other out
If you or your partner wants to stay in the home, you can come to an arrangement where one of you buys the other out. You’ll need to get the property valued to make sure the person leaving gets back the money they put in as well as their share of any equity.
The person staying in the house can apply to their bank or building society to increase their mortgage in order to buy out the other party. This can be useful if you don’t have access to significant savings. Lenders refer to this as capital raising.
One person stays but you both own it
This is more common if you have children. You may even want to consider setting up a Mesher Order through the courts that says the property can’t be sold until a certain time (for example when the children turn 18).
For assistance tackling your joint mortgage arrangements now you’re separating from your partner, our team of experts are here to help. We take the time to get to know you, understand your specific situation, and help you come up with a plan that works for you and your partner. Get in touch and a member of the team would be happy to help.