Mortgage & Separation

Separation – Managing your mortgage after a separation or divorce

If you are looking to divide your property and sort out the mortgage after a separation, it’s essential to know your rights and get expert advice. In fact, even if your breakup is amicable, you may need to consult a lawyer to get a separation agreement drawn up which dictates how your assets are to be split.

There are a few options one partner can buy the other out, the property can be sold and proceeds split, or the property is sold to a new person.

It’s best to contact your mortgage adviser at the beginning of your separation proceedings to find out whether you are able to buy the other partner out, or what you can purchase after you sell the house.

Once you have a draft or signed a version of the separation agreement we are able to supply this to the bank to get an approval of finance.

Buying your partner out

If you want to keep the house, you’ll need to buy your partner out of the mortgage.
You may be able to refinance the mortgage, giving you access to the cash to pay your partner out.

Go over your budget carefully to make sure you can afford mortgage payments on one income, and don’t forget other costs such as rates and maintenance.

Sell and split

Selling and splitting the money is a simple way to sort out the property in a separation. Although it can be hard to leave your home, it gives you a clean break and a fresh start.

If your mortgage is small and your property has increased in value over the years, you could end up in a good financial position, with a solid deposit in hand for your next property purchase.

Practical pointers

A divorce or separation may be emotional, but it’s essential to remember practical issues as well.

Even if the separation is amicable – engage a relationship property lawyer as soon as possible. A written agreement is required for any changes to the mortgage.

If you only have shared bank accounts, open a new one in your own name. You can keep your shared account open to make paying the mortgage and other shared expenses easier in the short term, but it’s still a good idea to have a separate account that only you can access.

Do your best to keep mortgage payments going. Even if one person moves out of the house, the bank will hold both of you liable for any missed payments. Some banks will let you take a mortgage holiday for 3 months, which could give you time to sort out a separation agreement. The best thing you can do is contact the bank early if there is going to be any repayments issues and engage with a Nest advisor to make a plan for the future.

Keep your cool. This is a stressful time and we are here to help!

 

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