If you have a mortgage and are going through a divorce, then you will, understandably, be concerned about what will happen with it during the financial proceedings involved in your divorce.
Keeping up payments on your mortgage
It’s worth noting that irrespective of your divorce, the mortgage company will still expect regular payments to be made in line with the original agreement. If you are named on the mortgage, it is your responsibility to make sure payments are made until a settlement has been reached, even if you believe your former partner should take on the payments on their own.
The choices available:
If you are at the stage where you are considering your options, here are some of the choices available to help you decide your next steps:
- Allow the courts to make the decision
If you have perhaps sought to negotiate and tried mediation, then you may have to let the courts make the decision on how your financial assets, including your home should be divided. If this is the best route for you, it’s a good idea to get legal advice from a family lawyer beforehand who will help put you in the picture.
- One party buys the other out of the property
This is a common option for when one spouse still wants to stay in the home after the divorce. If you go down this avenue, you will need to get a valuation of the property to ensure that the person being bought out receives the correct amount of funds.
- Sell the property
As mentioned, selling is the most straightforward of solutions and allows the mortgage to be paid off in full with equity divided between the two parties. This equity can be used as a deposit on another home for each of the parties. If your house is in negative equity, then you could choose to pay off the outstanding amount together or speak to your mortgage adviser to see what arrangements could be made.
- Offsetting other marital assets
If one person wants to remain in the home, the financial settlement can attribute other assets in the ‘matrimonial pot’ to the other spouse. This may look like, for example, the person not living in the home receiving a larger share of a pension or an investment.
- Both remain owners of the property
In some cases, it can work out best if you both carry on owning the property in joint names. This may be because there is only a short period of time until the mortgage agreement comes, children may want to stay in the family home or the solution may simply suit both of your personal circumstances.
When you can’t agree on the future of your mortgage and home
While many divorces can be amicable, with both parties willing to compromise and negotiating can be impossible for others. If you find yourself in this situation, then your case may have to be handled by the courts. When looking at financial arrangements, the courts will look at all the circumstances involved, including whether or not any children are involved in your divorce and putting their needs central to their final decisions. They will also consider the unique financial circumstances of each spouse.
Conclusion
Homes, along with other financial assets, including pensions, investments or other properties, for example, will all be considered during a financial settlement. Where possible, it is always easier and often less expensive if you can reach an agreement with your ex, rather than involve the courts, however, during a divorce, it can be easy for relations to sour and communication to break down. Seeking advice from a legal team ahead of making any decisions on your mortgage will help you make informed choices.
