Divorce / Separation

It can be difficult to know where to turn for clear and helpful divorce/separation advice when there is a joint property and mortgage involved. Although no two circumstances are identical, you may be encouraged to know that most lenders have well-established processes for dealing with this type of situation.

Joint Liability for Mortgage Payments

If you have a joint mortgage, it’s first important to be aware that both parties are “jointly and severally” liable for the mortgage payments. That means that even if you are the one who moves out of the joint home, you maintain an equal legal liability for the mortgage payments until it is repaid or transferred into a sole name – if mortgage payments fall into arrears, it will affect the credit files of both mortgage holders. Although you may find it difficult, inform your lender about the situation and ask about options – most deal with such situations sympathetically, and they may be able to offer assistance until the divorce can be finalised.

Property Sale Following Divorce/Separation

In cases where the property is to be sold, the resolution is usually quite straightforward. The mortgage is paid off and any surplus from the sale is split between the two parties depending on the agreement/circumstances. Alternatively, one half of the couple may wish to remain in the property and buy out the other party’s share. This usually involves the remaining party either taking a further advance on their existing mortgage or remortgaging to another lender while capital raising to release some of the equity on the property. In either case, the remaining mortgage is transferred to the sole name of the person remaining in the home, subject to the usual affordability and credit checks.

Contact Just Mortgage Brokers for expert mortgage advice on your options in the event of a separation or divorce.