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Going through divorce is challenging enough without having to worry about the likely implications for your mortgage. There are a few things to keep in mind as well as some precautionary measures to take so that you do not end up adversely affecting your credit status or having your home repossessed.
The first rule is simple; you will still be equally liable for repayments on your joint mortgage even if you move out of the family home. Therefore, if you think you are likely to have a dispute or if one party refuses to pay for their share then you should immediately contact your lender. The majority of banks and building societies will be sympathetic towards couples in this situation and may offer a ‘payment holiday’ until a final ruling has been made by the court.
Secondly, you need to consider the long term picture and weigh up all your options. You can either sell up and both move out of the property which is often the most straightforward solution. If there is any equity left in the property after the mortgage has been paid in full this will usually be split jointly between you.
However, if one party wishes to remain in the property then he or she will need to reapply for a new mortgage and this can be potentially challenging. Moving the mortgage into one person’s name will require the occupier to buy out the other person’s share, including their share of the equity. They will also need to have the property revalued and demonstrate their ability to repay the mortgage as a single person. If the occupier needs to increase the size of the mortgage they would also need to satisfy the lender that they could afford the additional amount. Whether or not that person is then allowed to transfer the mortgage solely into their name would be at the discretion of the individual lender. The final option is that you continue to pay your mortgage as normal which can often be the most appealing choice; especially if you are on good terms or the mortgage is fixed and has a short term left to run.
However, if you are in negative equity you will be limited in the variety of options available to you and should speak to your lender at the earliest opportunity to discuss how best to split the outstanding debt.
The right solution for you will always depend on your circumstances, therefore, whatever option you are considering, you should always seek independent advice to help you through the process.