Home is where the heart is, but what happens if all the love has gone from it?
If you and your spouse are headed for divorce, what happens to the property you share together?
We understand that divorce is a very upsetting and unsettling time. In this guide, we take a no-nonsense look at how your split affects your home and mortgage.
Keep emotions out of it
You’re probably already well aware of this, but the best way to tackle your finances when you split with your partner is to leave emotions out. Obviously this will be tough, but hopefully by working together you’ll be able to reach an agreement that works for you both quickly.
Having said that, we understand life isn’t always that easy.
Don’t forget your mortgage
Before we get to what can happen to your home when you split, we want to remind you how important it is to keep on top of your mortgage.
In the eyes of your lender, it doesn’t matter what you’re going through in your personal life - you need to keep making your repayments. If you start to miss them, there’s a risk your lender could repossess the property.
Whoever is named on the mortgage is responsible for all of it, not just part. So if two of you are named on the mortgage, now you’ve split you aren’t half as responsible for it as you were before.
If you’re going through a divorce, speak to your lender as soon as possible and let them know the situation. If you or your partner thinks you’ll struggle to keep up with the current repayments, tell your lender and they may be able to come up with a new arrangement.
You can find out more about what happens to your mortgage when you split with your partner here.
Who owns it?
You may have bought your home as a couple, or your partner may have owned it already when you moved in. Whatever the case, the ownership of your property can have an impact on how it is split.
If you’re joint tenants, it may be worth considering changing this to tenants in common until your divorce is complete. This is because if you’re joint tenants and one of you dies, your share of the property will automatically pass to the other joint tenant regardless of the fact you’ve split.
As tenants in common, your share of your home will pass to whomever you name in your will. You can make this change by filling in this form (if you live in England or Wales).
If only one of you is named on the Title Deeds, it means they are the legal owner. If this isn’t you, it might still be possible to protect your rights.
You’ll need to register a home rights notice by filling in this form. This means that your ex can’t sell the property or remortgage it without you finding out.
There are a few ways that you could choose to deal with your home when you split up. Briefly:
- One of you stays in the property, becomes the single owner and buys the other out.
- One of you stays in the property until your children reach a certain age, at which point it’s sold and the profits split.
- One of you stays in the property and the other receives a larger share of your other shared belongings or savings.
- You sell the property and split the profits.
Ultimately, what happens depends on you, your former partner and your family. Each option comes with its own pros and cons, which we’ll look at more closely below.
If you decide that you will stay in the family home and ownership will be transferred to you, and in turn you’ll buy your ex out, there are a few things to consider. The first is that it may not be possible for you to remortgage or take out a secured loan in order to cover your ex’s share.
When you applied for your current mortgage, if the amount you borrowed was based on both of your incomes, a lender may be unwilling to take your ex off it now. They may also be wary of letting you borrow more in order to release equity from your home and pay your ex off. So, although this sounds like a straightforward option, it might not be.
Even if you plan to let your ex take a greater share of your other belongings – the car, for example – in return for you keeping the house, you’ll need to change the ownership on the Title Deeds and mortgage. Again, your lender may not agree to you being the lone name on your mortgage.
Speak to your lender as soon as possible to find out what your options are.
All grown up
If you have children together, you may decide that one of you stays in the property until your youngest child reaches a certain age – 18, for example. At this time, the property would be sold and the profits split.
However, this often involves you both staying on the mortgage. If your partner wants to apply for a second mortgage to buy a new home, this will make it very hard for them. They may have to rent instead until you’re all ready to sell the property.
If you both decide the best option is to make a clean break and sell up, even this may not be that straightforward. You will need to both agree on the value of your home and the price to market it at, along with the minimum price you’d both accept.
If you get an offer that you’re happy with but your ex wants more, this could hold up the whole process. And if the housing market in your area is currently stalling, you may even have to both agree to sell the property for less than you were hoping for in order to move on. If not, you could be stuck sharing a home and a mortgage for months after you’ve split.
The final hurdle is the value of your property. If it has fallen and you find yourself in negative equity, you’ll both need to come up with a way to cover the money you still owe on your mortgage after the property sells.
You may have more questions now than you started with, but we hope this has shown you what your options are when it comes to your home and your divorce.
The next few months could be difficult and draining, but if you and your ex are able to communicate and compromise, hopefully you can both move on sooner rather than later.
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By Hayley Cox