What happens to a mortgage after a divorce?

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What happens to a mortgage after a divorce?

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    With many marriages now ending in divorce or separation, it’s not uncommon to have clients asking us about what happens to a joint mortgage following a breakup. We’ll cover some of the commonly asked questions.

    Managing your joint mortgage as you go through divorce proceedings can add to the challenge when your long-term relationship is ending. It’s important to seek legal advice to ensure that both parties are dealt with fairly when it comes to dealing with the family home after a divorce, especially where children are involved.

    Simmonds Mortgage Services can help whatever your situation. Get in touch with us today for mortgage advice and mortgage services.

    When should you tell your mortgage lender you are divorcing?

    If your marriage or civil partnership is ending and you are considering separation or divorce, it’s best to tell your mortgage provider your situation before you find yourself in any financial difficulties or you have missed payments.

    If you are struggling to make monthly mortgage repayments, your lender may be able to offer you a payment holiday while the divorce settlement is sorted out.

    What mortgage options are there for divorcing couples?

    There are a few different options for managing the finances when you are getting a divorce:

    Refinancing the mortgage

    If you are staying in the family home, you may be able to end the joint mortgage arrangements by refinancing the property solely in your name, if you can afford this. If one partner is taking on sole ownership rights, the property’s title deeds will need to be amended to show just your name.

    Independent legal advice is recommended when managing any changes to jointly owned property. This is called a transfer of equity and is usually done with your lender. You will need to evidence you can afford the mortgage on your new sole income.

    Getting an additional mortgage

    You could remain on the joint mortgage contract if you have children involved so that they are not forced to leave their current home when you divorce. You can take a second mortgage as a sole owner on another property, provided you can meet the affordability criteria and keep up repayments on both mortgages.

    Selling the property

    Many divorcing couples have no choice but to sell the property and pay off the mortgage to move on with their lives. Any financial settlement in the divorce may require the sale of the joint asset to redeem the outstanding joint mortgage.

    Adding a new spouse or partner

    It is possible to add a new spouse or partner to an existing mortgage if your ex-partner is no longer on the mortgage deeds. If your divorce is finalised and you are the sole owner, your ex-partner has no rights to prevent you from adding a new spouse or partner to your mortgage.

    What happens if you have a joint mortgage and split up?

    Splitting up when you have a joint mortgage and leaving the marital home can be stressful. If the other party has behaved badly in the relationship and you feel that you are being forced out of your home, you need to take advice on your matrimonial rights to ensure the other partner doesn’t get more than their fair share of the asset.

    Can a joint mortgage be transferred to one person?

    Yes, a joint mortgage can be transferred to one partner, enabling you to keep your existing mortgage if you can meet affordability criteria and make monthly payments on your own.

    How can Simmonds Mortgage Services help?

    Simmonds Mortgage Services is an experienced mortgage broker providing access to a wide range of lenders who can assist with mortgage after-divorce situations. Call us on 01184 693037 for expert advice on getting a mortgage on a new property following a divorce.

    Frequently asked questions about mortgages after divorce

    Should both ex-spouses continue paying the mortgage repayments?

    Until the mortgage is redeemed, it is the responsibility of both you and your ex to keep up repayments.

    Will missed mortgage payments affect both ex-spouse’s credit scores?

    While your finances are linked in your credit files, any missed repayments can harm both partners’ credit ratings and could lead to a future financial dispute between you. It’s a good idea to check if you are still financially linked to a previous partner, as this can adversely affect your credit file.

    What happens if I want to stay in the property but can’t afford the mortgage on my own?

    You may be able to take out a guarantor mortgage if you can get a family member to be the guarantor on your loan. This could be a parent, another family member or even a good friend. In this situation, the guarantor would be responsible for making repayments if you defaulted.

    Guarantor mortgages can be harder to find, so you might want to speak to a specialist mortgage adviser to help you find a new mortgage. Another option could be a joint borrower sole proprietor mortgage where only one borrower has rights to the property while both are responsible for making repayments.

    What happens if there is negative equity on a jointly owned property?

    If you divorce and sell your property for less than the outstanding debt, you will both be liable for the remaining mortgage balance. You might decide that it is better to keep the property until prices have risen enough to pay off the outstanding mortgage balance.

    Mortgage lenders might allow you to rent out your property in this situation while you wait for prices to rise, but this option will depend on your mortgage provider’s point of view on negative equity. If you have any other jointly owned assets, such as shares, these could be used to pay off the negative equity balance.

    Can I stop my partner from selling the family home if I’m not on the title deeds?

    You can contact HM Land Registry and register your ‘home rights’ to protect yourself while going through a divorce or separation. You will only be able to stay in the property until the courts decide how to divide up the marital assets.

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    Andrew Simmonds

    Andrew Simmonds is the managing director at Simmonds Mortgage Services. He's been providing mortgage advice to home owners for many years.

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