After the madness of the Christmas period and the over-indulgence, many of us hit the gym, start the diet or become Vegan for 5 minutes, vowing that this year will be different. One of the other fallouts of this period is the sad fact that many decide this will be the last Christmas spent with a significant other. Separations and divorce lead to a great many questions around how the marital home is dealt with and the associate mortgage questions that go with it.
Going through a separation or divorce when you own a home and have a mortgage together can be especially troubling.
With statistics suggesting that up to 50% of marriages now end in divorce, you are not alone, but one of the biggest discussion points, often the most emotional, is the fate of the family home.
Having invested time, money and built up memories, not to mention the fact that children may be settled in a local school, it is no surprise that there is a level of worry attached to this.
Jointly and severally liable
If you do have a joint mortgage the first thing to note is that both parties are jointly and severally liable for the mortgage. This means that if one partner does not pay the mortgage, the other is legally responsible for paying the whole amount.
If you are considering a divorce, it is essential you discuss the mortgage payment as a priority, however difficult this may be. Any missed payments will affect both of your credit scores and could mean neither of you will be able to take out a mortgage for some time.
If the divorce is acrimonious and one person refuses to pay the mortgage, it is essential you speak to your mortgage lender at the earliest opportunity to explain the situation.
Banks do have a duty of care to look after their borrowers and may be more sympathetic to your situation than you may think. Remember, there is nothing to be embarrassed about in asking your lender for assistance and the earlier you do this, the more you can avoid issues in the future and give you some much-needed breathing space.
If you are going through a divorce and have a mortgage there are several options: –
Sell and Move
Selling the property, paying off the mortgage and splitting the equity 50/50 is the cleanest and easiest option which will enable both of you to move on in your separate directions.
If there are children involved this may not be so easy of course, or if you cannot agree on the percentage of split then this will be a matter for lawyers to discuss.
Buying Out Your Partner
If you do have children who are settled into the local school, or do not wish to leave the property for a host of other reasons, then you may want to investigate buying out your partner. This involves taking over the existing mortgage and potentially increasing it to pay them a share of the remaining equity.
The first step is to ascertain if the remaining partner can service the existing mortgage and any potential increase. This is done as with any standard mortgage and your mortgage lender will use their standard affordability calculations. Your existing lender does not have to transfer the mortgage into one name and will only do so if they believe you can afford it.
As lenders differ where this is concerned it may be necessary to look at another lender and re-mortgaged for this purpose. This is the situation where a good mortgage broker can be extremely beneficial in finding the best mortgages for divorcing couples.
Lenders will take into account any maintenance payments that are being received, especially if backed by a court order, which can help to demonstrate affordability.
If you are able to do this then this can be a very satisfactory way for both parties to break cleanly and move on with their lives.
If this cannot be done, then you may have to consider a sale or continuing on a joint mortgage for the time being.
Maintaining the Existing Mortgage
For those separating, sometimes it proves difficult to sell the property or buy out the other party for a whole variety of reasons.
If this is the case it may be better to continue with the mortgage as it is. This can be done especially if you and your partner split on good terms, both of you understand the importance of keeping a good credit record and come to an early agreement to maintain the payments.
This is a good move if you have high early repayment penalties, nearing the end of your mortgage or need to keep children as settled as possible in the short term.
You can always revisit this in the future when it becomes a better time to sell or re-mortgaged into one name.
We appreciate that sometimes partners can be unreasonable. If you do find yourself in a situation where your partner is refusing to pay the mortgage or threatening not to, and you cannot maintain the payments yourself it is imperative to speak to your solicitor and mortgage lender immediately.
Remember, they will be damaging their credit rating as well so a fast solution to the issue is always best.
Of course, there are a wealth of other elements to consider during this testing time but dealing with the issue of the family home and mortgage early on, taking professional advice or asking your lender for help, can make a big difference to stress levels.
If you do need assistance with your mortgage during a divorce or separation, please do not hesitate to contact us confidentially:
0800 970 1795