What does Divorce mean for your Mortgage?
Going through a divorce is a particularly tough time for all those involved. But it can unfortunately be made even more difficult where the division of assets is concerned.
In fact, deciding what happens to the family home can be one of the biggest financial decisions you could face. And going through a divorce when you have an outstanding mortgage with your partner can be a big worry.
Knowing what solutions are available to you and the options you might want to take can make the process much less stressful.
Several Options Available to You
There are a number of options available to both yourself and your spouse. But exactly what happens to your mortgage will largely depend on your plans for the property and your individual circumstances.
But the most important aspect to consider during this process is that you will need to continue to pay the mortgage until you have come to a solution. When two people take out a joint mortgage they are agreeing to be equally liable of the debt for the duration of the mortgage and not just whilst they live there. Therefore any failure to pay the mortgage on time can be damaging to credit histories.
Sell Up and Move Out
Both of you leaving the family home is often the easiest and most straight forward way to any potential issues. Selling the house and paying off the mortgage is a clean break and the least messy. Any equity left after the mortgage has been paid off can then be split equally between the two parties.
However, we understand that for sentimental reasons this isn’t always the route people want to go down.
Buy the Other Out
If one partner wishes to remain in the family home they will have to prove to the lender that he or she is fully capable of covering the mortgage payments on their own. This is crucial as your lender is under no legal obligation to remove the other member from the mortgage.
The partner staying in the house will be assessed as if they were a new applicant and the lender will decide whether the mortgage is affordable. If you can prove and therefore satisfy the lender that you can afford the mortgage then they may agree to you becoming the sole mortgage holder.