Divorce and Mortgages

Divorce, Mortgages and the Courts

Ideally, the issue of what to do with the family home and the mortgage that exists on the family home can be agreed upon by both parties, without the need to go to court for judgement. In order to determine whether an agreement is suitable for you, it is necessary to have at least a basic understanding of how the court would make its decision and what factors would be taken into account.

How a Court Decision is Reached
When a court is considering a divorce judgement, the individual circumstances are taken into account. This means that it is unlikely that all assets (including the marital home) will simply be split 50 / 50. Therefore, when you are looking at your budget and mortgage requirements, post divorce, it is important to realise that you may not simply have half of the marital home's value to play with. Depending on the surrounding circumstances, you may have a lot more (or less) to put towards your next property.

Factors Taken into Account
In order to understand your budget and the necessary extent of any mortgage that you will require to finance a new property, you will need to look at the likely amount that you will receive during your divorce settlement.

The factors that a court will take into account include:

The overall welfare of each individual: Particular regard is given to any children under the age of 18 who will be living with one of the parties. For example, in a divorce where young children remain with the mother, it is common for the court to ensure that it is financially possible for the mother and children to stay in the family home. This may reduce the amount of cash available for the father to fund another property, thus requiring him to take a larger mortgage.
The income and resources of each party: If one party has a substantially larger income, this may be taken into account as they will also be entitled to a larger mortgage allowing them either to buy out the other party or to purchase another property. As well as the income of both parties, the financial obligations of both parties are also considered. Therefore, if one party has children from a previous relationship, or even large individual debts, this may be an issue.
Other issues include the standard of living that the family enjoyed before the divorce, how long the marriage was for and what, if any, financial resources each party had put into obtaining the joint assets.

Consider all of these points carefully in relation to your own circumstances and formulate your own opinion as to how much you are likely to be awarded by the court. This will give you a good idea of the extent of additional financing that you might have to obtain in order to live as an individual.

Summary
During a marriage breakdown, it is important to try to decide, objectively, how much of the joint family home is likely to be considered to be yours; by doing this, you can determine the extent of additional financing that you may need;
factors that are taken into account include current financial status and what each individual contributed to the asset;
bear in mind that it is unlikely that a court will decide that everything should be split 50 / 50, so make your own judgements and attempt to negotiate amicably.