Divorce & Dealing with a Joint Mortgage
04 February 2016
Getting divorced can be very upsetting for you and your family, but if you have a property with a joint mortgage in both your names, dealing with this can be even more unsettling.
Keeping the family home with your children in it may be the main focus of your divorce, but it is worth looking at all the options when it comes to deciding what course of action to take. So, what exactly are the options?
Sell the Property
Selling your property, paying off the mortgage and going your separate ways does have its benefits. It provides you both with a clean break from each other, with no ties after the divorce. Once the property is sold and the mortgage paid, any money left over will be split between you as an asset in the divorce.
This part of the divorce process can be contentious for many couples. Trying to reach a sensible agreement when carrying the emotional hurt and upset from the breakdown of your marriage could have a detrimental impact on your ability to compromise. If you cannot agree between yourselves, you may want to attend Mediation with your ex or call our Divorce Solicitors to find out how we can help you to achieve a constructive solution for you.
If you decide to go to Court and ask a Judge to decide the share of property for you, you could spend a substantial amount on legal fees and the outcome could be that you get an equal share of the property money.
Keep the Property
You might decide that the best option is for one of you to stay in the property – this is normally the person who has the main responsibility of caring for the children. For many divorcing couples, one of their main concerns when getting divorced is to try to keep the upheaval in their children's lives to a minimum. By keeping the family home, this can be achieved to some extent and can therefore be one of the best options, but first you will need to establish if your mortgage provider will transfer the mortgage into a single name, and also allow you to take on the mortgage.
Once you have agreement from your mortgage provider you will need to come to a financial agreement with your ex so you can buy them out of the property. You will have to get a current valuation on the property so the amount of equity can be determined as this will have a bearing on the amount that is payable to your ex-spouse. This option does provide you with a clean break in your divorce, but it is more complex than selling the property as there are a number of barriers you will need to remove to keep the property. If your ex wants to buy you out of the property, this will work in exactly the same way.
Keep the Property and Both Pay the Joint Mortgage
The final option to consider is to keep the property and for both parties to continue to pay the joint mortgage. This can happen if you split on good terms and suits both of you and you can afford the cost of continuing to pay the mortgage and live elsewhere. It can work particularly well if you have a fixed term mortgage and there are stiff penalties for ending the mortgage early. This does not provide you with a clean break divorce because you are still joint owners of one of your biggest financial assets.
There are some other factors that you may need to take into account. If your property is currently in negative equity, this can be a challenge for you both. It may be worth discussing your options with your mortgage provider to see what can be done – options include splitting the debt between you but this has to be agreed with your mortgage provider.
If your name is not on the mortgage, this does not mean that you are not entitled to a share of the property. If you contributed financially to the property and you are married then it will be classed as a joint asset. If your ex owned the property before you were married, this may be more difficult to challenge, but it is worth discussing the situation with our Divorce Solicitors who can offer you specific advice in these circumstances.
Even though you are getting divorced, it is really important to remember that you are both still responsible for paying the joint mortgage and you should continue to do so, even if you have left the property. Talk to the mortgage provider if you are having difficulties and advise them of your circumstances. They would rather be kept informed of the situation and be in a position to discuss your options with you, than be unaware of what is happening.
Your property, alongside your pension, is likely to be one of the largest assets you and your ex own, so it is always best to get specialist legal advice about how to split the assets with a Divorce Solicitor. This can ensure that you remain protected throughout the divorce process.