Mortgage after divorce.
What happens with a mortgage after divorce.
Mortgages after divorce:
your questions answered
There are no set rules about what happens to a home you jointly own with your partner after you divorce or separate. During a divorce settlement involving dependent children the courts will work to ensure they have a secure home, as an immediate priority.
It may be that one person stays in the home and ‘buys out’ the share of the other party. If neither person can do this, there are several options which may be appropriate:
- transferring ownership of the home to one person, perhaps with a lesser share of other possessions
- retaining joint ownership but giving one party the right to stay, if there are children involved
- transferring the home to one party but with a charge secured on the property so that the other party receives a set percentage when the home is sold
- selling the home and splitting the proceeds between both parties in whatever proportions are agreed upon and fair
Of course, many of these would require changes to the mortgage contract so it is important you talk to your existing mortgage lender as soon as possible to see what options may be available to you.
There are lots of factors you will need to take into consideration, such as any outstanding mortgage balance, the split of ownership and how much the home is worth. You’d need to calculate and agree what you would need to pay your former partner in order to take full ownership.
This would mean you would then be fully responsible for the existing mortgage on the property plus any additional lending you have requested. You’d be subject to new affordability checks with your lender, to make sure the loan is deemed affordable both now and should your circumstances or interest rates change in the future. It’s best to contact your existing mortgage lender early on so you can discuss what might be possible.
If one of the named parties on the mortgage is unable or unwilling to pay their share of the mortgage after divorce, you may be pursued by the lender for a higher percentage, or all, of the mortgage payments. Whilst this may impact your finances in the short term, not making the full payments due may also have long term effects for the credit profile of both named borrowers, regardless of the status of your relationship, and could result in you being turned down for future mortgage applications or credit agreements.
If you are concerned your payments may not be made on your existing mortgage you will need to contact your mortgage lender as soon as possible. If you have a mortgage with Suffolk Building Society please visit our problems paying your mortgage page or get in touch now.
A credit score is often seen as the holy grail of borrowing – it shows lenders and other credit providers how responsible you are and whether you’d be a ‘good risk’ when it comes to paying the money back. Saying that, here at Suffolk Building Society we don’t base our decisions on your credit score – so if your score is low, but your record is good, we’ll see how we can help.
Here are three simple ways of ensuring you’re in the best position when it comes to passing a credit check:
- Continue to make the scheduled repayments on existing credit agreements. Missed payments and arrears are a big red flag
- Don’t apply for lots of credit agreements at the same time, or just before a mortgage application, and only apply for credit which you can afford to repay
- Check whether you have any outstanding credit defaults or County Court Judgements (known as CCJs) and consider seeking advice about these.
For more information visit the Money Advice Service which is a free, impartial resource.
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