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What does divorce mean for your mortgage?

The break up of a marriage can be a stressful and particularly expensive time. In fact, research from law firm Seddons in 2016 suggested the typical marriage break up now costs an enormous £70,000, covering everything from the legal fees to loss of earnings.

A big factor here too is the cost of sorting out what happens with the family home, as a divorce can have a significant impact on whether you can continue to afford the mortgage.

Why it’s a good idea to speak to your mortgage lender

If you’re splitting up with your other half, it’s understandable if you don’t want to talk to anyone about it. But it’s really important that you have a chat with your mortgage lender early on in the process.

That way, they are more likely to be understanding if you need a little help with the repayments, perhaps in the form of a payment holiday for a short period. This is much easier to arrange if you speak to your lender swiftly rather than after you’ve already started to fall behind on your repayments.

This can only be a short-term measure though, and you are still responsible for paying the mortgage off. Remember, if you don’t keep up with your repayments you will be at risk of having the property repossessed.

Taking over the mortgage yourself

It may be that you want to buy your partner out and remain in the property after the split. To do so, you will need to prove to a mortgage lender that you can afford to meet the monthly repayments on your own.

Your lender is under no obligation to remove your ex-partner from the mortgage deed unless you can pass this test - you’ll be assessed if you are a new borrower.

It may be that you need to borrow a larger amount too, in order to buy out your ex-partner’s stake, so the affordability tests may be even tougher to pass.

Transfer of equity

If you want to remove a name from a joint mortgage, as one party is taking over the loan, then you’ll need to apply for a transfer of equity. This allows you to change the legal ownership of a property that has an outstanding mortgage on it.

You can do this through a solicitor or make use of a DIY transfer of equity pack, which is offered by some legal firms online.

Sell up and start again

In many ways, selling the family home after a divorce and going your separate ways is the most straightforward option. After all, it’s a clean break from a property filled with uncomfortable memories.

You can use the proceeds to clear the mortgage and then head off with any profits to put towards your next home.

It’s worth remembering though that selling a property the traditional way comes with a host of costs to cover, while it will also usually take months. During that time, you will still need to pay the mortgage every month, making a further dent in any money you have to fund your fresh start.

You could sell much quicker through Open Property Group; you’ll get a no-obligation cash offer for your property within 48 hours of requesting a valuation.

Published on 18th June 2018

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