Divorce and Mortgages

Divorce & Mortgages - Alternatives

In many cases, the only prudent step is for the family home to be sold, the proceeds split and both parties to go their separate ways to obtain mortgages and purchase independently. However, alternative approaches exist that should be considered. Remember, selling the family home can be a costly exercise and may result in you accepting a lower offer in order to complete the sale quickly and move on with your separate lives. Therefore, it is always sensible to look at all of the available options, before taking that big step.

One Party Takes Full Ownership
Instead of selling the family home, it may be sensible to allow one party to take full ownership of the property. This could be the most practical solution if one of the parties has full childcare responsibility for children under the age of 18 and when it seems unwise to move young children, particularly if the chances of finding suitable alternative accommodation are minimal.

Equally, one party may be able to purchase the property from the other party if they have individual savings or are on a sufficiently high salary to be able to take a further mortgage to fund the additional capital that they will have to find.

A further possibility is to offset other marital assets against the value of the family home. For example, if there is a large savings account or even a second property, it may be possible that one party relinquishes their share in other assets in exchange for gaining full ownership of the marital home.

Alternative Ways of Financing the Marital Home
Obtaining a mortgage on divorce is a slightly different process compared with obtaining a standard mortgage. Lenders recognise that couples going through a divorce often have different requirements and differing income streams. Consequently, most high street lenders are now prepared to take a more individualistic approach when it comes to mortgage offers after divorce.

For example, mortgage lenders will now normally take maintenance payments into account when deciding how much an individual can obtain as a mortgage. This is vitally important as, in many cases, one party will have been the main earner and maintenance is used to redress this balance. By allowing maintenance to be included in mortgage calculations this allows the courts to ensure that sufficient monthly payments are made to the remaining party so that they can fund the outright purchase of the property in their own name.

Summary
Several alternatives exist to simply selling the marital home and purchasing two new properties;
it may be preferable for one party, particularly if there are children involved, to stay in the marital home;
this can be achieved by buying out the other party, adjusting assets or by obtaining a bigger mortgage;
in most cases, maintenance payments can be considered as income towards the new mortgage.