For many couples their family home will be their biggest asset and will involve a mortgage. As specialist divorce and finance lawyers we are often asked questions about how the mortgage should be dealt with. Director and divorce solicitor Jonathan Madge explains and demystifies some of the biggest misconceptions.
Managing family finances over the divorce period as you and your spouse work towards a permanent financial settlement can be tricky. Deciding how to manage the mortgage on the family home and dealing with this cooperatively can not only ease some of the financial pressure, but can even be a key part of negotiating the finances together for a fair outcome in the future, whether with assistance from your divorce and finance solicitors or between yourselves ‘over the kitchen table’.
Ensuring that the mortgage is kept under control and each party’s credit rating is kept as healthy as possible is important. This puts you both in the best position to get a mortgage in their sole name at the end of the process, whether that is to enable one of you to stay in the family home or because one or both of you are buying a new place.
Mortgage and divorce frequently asked questions
“As long as I pay my half of the mortgage then that’s okay, isn’t it?”
It is okay as long as you are sure that the whole monthly mortgage repayments are being paid on time by someone.
It is not correct to say that each party is obliged to pay “my half of the mortgage”. Joint mortgages are invariably made “jointly and severally” which means that each borrower is actually responsible for the whole of the monthly mortgage payment, and the lender could pursue either borrower for all of the mortgage repayments. The lender does not have to justify to one borrower why he or she is being pursued or why the lender is not pursuing the other borrower.
As long as you and your spouse agree to pay half each (or agree on a different division) and comply with all the other mortgage terms then you should keep the lender happy and you should keep your credit rating in good order.
It is highly recommended to check with the lender each month that a full repayment has been made.
“Why should I pay any of the mortgage when I have moved out? I have rent to cover now”
Each borrower is jointly and severally liable for the whole mortgage, so just because you have rent to pay does not alter your liability to the lender. Often separated couples agree that the party who has remained living in the family home meets the mortgage repayments leaving the other party with enough income to cover rent. However, this may have to be negotiated. The party who has to meet rental payments cannot compel the party who is remaining in the family home to meet the whole mortgage. In cases involving children you also have to be careful about agreeing whether the parent with care will accept mortgage payments fully or partly instead of Child Maintenance: the Child Maintenance Service will not accept mortgage payments as Child Maintenance, so the parties need to co-operate honestly where the spouse who has left the home is potentially fully liable for both mortgage payments and Child Maintenance.
“We’ve kept the mortgage payments going for six months since separation but can’t keep going after next month. Shall I just keep my head down with the lender and hope for the best…?”
It can be clear that you and your spouse will not be able to maintain the significant increase in overall outgoings once one of you moves out and has to meet rent as well as utilities in their new place.
It is a good idea to look at the overall income and outgoings at a very early stage, and if you can see problems up ahead in covering all outgoings including the mortgage you and your spouse can agree to approach the lender and request a repayment “holiday”. This can look like the lender agreeing to accept reduced payments or no payments at all for a fixed number of months. However, the lender is only likely to agree to this if you have a more-or-less impeccable repayment record. That is why it is very important to have these discussions as soon as it is clear that you may have difficulty meeting mortgage payments.
Even if you manage to secure a payment holiday you should be careful not to get too used to it: the usual three or six months ‘holiday’ soon ticks by, and you should be using that period proactively to reach a final financial settlement with your husband or wife.
“My wife/husband has stayed in the home and I assume they are meeting the mortgage repayments”
It’s crucial to remember that both spouses are jointly responsible for the mortgage, regardless of living arrangements. It can cause significant problems when one spouse leaves the home to live elsewhere and does not let the lender know. We always recommend that you keep the lender up-to-date with your new address and contact details so the lender can get in touch with you promptly if there is any difficulty with the mortgage. Burying your head in the sand is not the best approach.
“We are still on a fixed rate mortgage, with a very low interest rate. How can we keep the benefit of this?”
If your current mortgage product has a very favourable interest rate and still some months or years to run, then it can be a good idea to work out if at least one of you can keep the benefit of this. Some lenders will allow one or other of you (but rarely both) to “port” an existing mortgage product to a new home. Ask your lender if this is possible in your case.
If “porting” the mortgage product is not possible, then you and your spouse need to agree that you keep the existing mortgage in place and whichever of you is staying in the home gets the benefit of those lower mortgage repayments until that mortgage product expires, at which point, that party will need to set up a new mortgage in his or her sole name.
The other spouse will have remained as co-borrower and, whilst you will probably agree that you will not have to make monthly repayments, it will probably have prevented you from taking out a new mortgage yourself. It may be fair for that to be reflected elsewhere in the financial settlement for instance, giving you a bit more capital to compensate them for bearing with the other party financially.
For anything related to your mortgage you should always check your position out with your lender.
Navigating the complexities of mortgage management during a divorce requires careful consideration and often expert guidance. Remember, it’s not just about splitting assets, but about finding a path forward that respects the needs and circumstances of each individual. Our team at The Family Law Company has proven expertise in divorce and finance law and can help you reach a fair and sustainable outcome.
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