Mortgage Options

28 Jan 2019

What to Do if Divorce Affects Your Property and Mortgage

After the craziness of the Christmas season and the over-indulgence, many people decide to join a gym, start a new healthy diet or take part in Veganuary (going vegan for the whole of January), promising that 2019 will be a different and more successful year than the last. One of the other fallouts during this new year period is the unfortunate fact that many decide to divorce with a significant other.  Divorce leads to many questions around how the marital home is dealt with and the associated questions about the mortgage options.

Going through a divorce when you own a home and have a mortgage together can be exceptionally troubling. But, one of the largest discussion points is the fate of the property where the family live. Having invested time and built up memories, not to mention the fact that there might be children settled in a local school situated close to the family home, it is no surprise that there is a high level of worry and distress attached to divorce and separation.

Speak to Your Mortgage Provider

As always when your financial situations change and negatively impact your income, it is vitally important to speak to your mortgage provider as soon as possible. They will be able to talk you through your options and make recommendations on the next course of action.

Mortgage providers are becoming more compassionate to divorce and, in many cases, may provide a temporary grace period while you organise the situation. It may also help your position if you have drawn up a full budget to illustrate you can afford the extended mortgage repayments.

Continue to Make Your Mortgage Repayments

One very important thing to remember is to continue paying the mortgage after you divorce from your partner. A joint mortgage means that you are both liable for the debt, and this is until the mortgage has been completely paid off or transferred to only one party’s name, regardless of whether you still live in the same property or not.

This means that it is vital to keep making your repayments while you decide what to do, because falling into arrears can damage the credit files of you and your ex, which will still be influencing the other person’s credit file.

Prioritise Your Children and Their Needs

Most of those who divorce don’t go to a court hearing to settle their financial disputes. However, it is always a good idea to understand what the courts would decide in respect of the family home.

If you have children, the court will consider the fact that they need somewhere suitable and secure to live with each parent. The outcome will also depend upon your personal circumstances.

As parents, it is always important to keep the needs of your children as the biggest priority during a divorce as it is their future that is going to be affected as a result of the separation. This includes trying to disrupt them as little as possible.

The Transfer of Equity

After a separation takes place, the divorcees may have to transfer their share in a jointly owned property back, so only one of them owns the property legally. This is called a transfer of equity and can be in the form of a ‘gift’, where the leaving party receives no financial payment for their share, or the leaving party ‘sell’s their share of the property to the person remaining. There are factors to consider, such as if a court order has been awarded, in which case the leaving party is legally entitled to their share of the property, regardless if they will be residing there, so the property will either need to be sold, or the leaving party be ‘bought out’. Additionally, if a full price has been paid for the property share, this will not legally be seen as transfer of equity gift either.

If you have recently divorced and now looking to move into a new property, then MO can help! The great thing about our site is that you can compare 1,000s of mortgages based on your personal information. The info you provide allows us to search for a mortgage that’s right for you. We show you the mortgage options that are best suited to your situation.

LauraWaller

Laura Waller

Laura Waller has been working in the mortgages industry since 2013, joining an independent brokerage in Essex. Laura has CeMAP 2 & 3 – Certificates in Mortgages Advice and Practice. Since then Laura oversees marketing for Mortgages Online, using her experience and expertise to write articles and blogs about mortgages and related topics.

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