Who Pays the Mortage in a Separation?

08 August 2018

If you and your partner aren't married and you own a property together, you will
both still be responsible for paying the mortgage if your relationship breaks
down. This remains the case until the property is sold or the mortgage is
transferred into one person's sole name.

Joint Mortgage after Separation

When you have a joint mortgage together, you are both responsible for paying the mortgage. This responsibility continues even if your relationship ends and one of you moves out of the property.

If one person fails to contribute towards the mortgage, perhaps because he/she has moved out or can't afford it, it will affect both of your credit ratings. This is because when you buy a property with someone else, your credit history becomes linked.

So it's important that both of you keep up with the mortgage repayments until you work out what to do. There are different options available, and what is best for you will depend on your individual (and financial) circumstances.

Sell the Property

The first option is to sell the property and both of you move out. You can divide any profit that is made, although how you do this may require some negotiation. If you have a Declaration of Trust (Deed of Trust) in place, then you'll already have agreed how the equity should be divided.

Transfer the Mortgage into One Person's Name

One person could remain in the property and buy the other out. The mortgage would need to be transferred into that person's sole name, and the lender would need to ensure he/she could afford it first.

This option will be dependent on the financial position of the person who wants to stay in the property. But it could mean that the person who moves out has greater financial freedom to get another mortgage, while the person who stays doesn't have to rely on their ex to meet the mortgage repayments. It will also sever the link between your credit ratings.

Guarantor Mortgage

If you really want to remain in the property but your lender refuses to transfer the mortgage into your sole name on the basis that you can't afford it, you could always get a guarantor mortgage. This is when a family member or close friend agrees to be your guarantor, and will be responsible for paying the mortgage, should you be unable to do so.

Do Nothing

You could do nothing. One person could remain living in the home and you could both contribute towards the mortgage, as per normal. This is usually only a viable option if the person who leaves the property can also afford to pay for a separate household. But if it is financially feasible, you might want to make this arrangement until a certain time – for example, until your children have finished full-time education.

If You're Married

It's important to note that the situation is slightly different if you're married.

If you have a joint mortgage together, you'll both still be responsible for keeping up with the repayments. But because you're married, rather than cohabiting, you have financial obligations to each other which must be met.

Therefore the Court may make Court Orders that don't tally with your wishes. For example, the Court may rule that one person can remain living in the property, but the other must continue to contribute towards the mortgage until a specified date.

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