Dividing the family home and mortgage during divorce

BREAKING UP IS HARD TO DO

SEPARATIONS ARE NEVER EASY, but when they involve a jointly owned property there is an additional administrative burden to take care of. If you find yourself in this situation, here are answers to some of the common questions people have.

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Q: WHO IS LIABLE TO PAY THE MORTGAGE AFTER A SEPARATION?

A: If you have a joint mortgage with another person, both of you are (in legal terminology) “jointly and severally liable” for that mortgage. It makes no difference if you’re married, in a registered civil partnership or simply living together; both individuals can be held responsible for the repayment of the mortgage.

Q: WHAT HAPPENS IF I STOP PAYING?

A: If the mortgage provider doesn’t receive full payments, it will hold both individuals responsible and can pursue both or either for repayment.

“Separations are never easy, but when they involve a jointly owned property there is an additional administrative burden to take care of.”

Q: WHAT HAPPENS IF MY EX-PARTNER STOPS PAYING?

A: The same applies if your partner stops making repayments. The mortgage provider can hold you responsible for missed payments, even if you paid your share.

Q: WILL THIS AFFECT MY CREDIT SCORE?

A: Yes. Any joint debts, including your mortgage, will be recorded on both individuals’ credit scores. This may affect your ability to obtain a mortgage or other loan in the future.

Q: HOW CAN I REPAY MY MORTGAGE AFTER SEPARATION OR DIVORCE?

A: You typically have two options:

1. Sell the property and move out to pay off the mortgage, splitting any profits equally (or in proportion to how much you both paid into the property).

2. One partner remains in the property, buying the other partner’s share so that they can move into another property. The mortgage will then be in just one person’s name. You’ll need to agree on an approach with your ex-partner, and with your mortgage provider. They will need to see evidence that the person who remains on the mortgage can afford the repayments alone.

Q: HOW CAN I AFFORD TO BUY MY EX-PARTNER’S SHARE?

A: There are various ways you can look to buy out your expartner to take full ownership of the marital home. You could initially see if you can reach an amicable settlement and pay a lump sum based on the share of the property they have. There may be an option to remortgage the property to free up the cash to buy out your ex-partner. Alternatively, if you can’t meet the current mortgage payments alone, see if someone, typically a family member, will act as guarantor for the mortgage.

Q: HOW CAN UNMARRIED COUPLES PROTECT THEIR ASSETS?

A: Unmarried couples who want to jointly buy a property can sign a cohabitation agreement to outline how their assets will be divided if they separate, including those owned at the start of the relationship and any acquired during the relationship.

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>> LOOKING TO BUY OUT A PARTNER ON A MORTGAGE? <<

Separation or divorce is a difficult but sometimes unavoidable situation for some people. If you are the spouse who is wishing to retain the family home in the long-term future, then it is crucial to demonstrate from the outset that you are in a position to take over the mortgage and meet the monthly payments both now and in the long-term future. To discuss your situation, contact Cedar Crest Ltd – telephone UK T: +44 (0) 203 883 1017, HK T: +852 6645 4462 – email Info@cedar-crest.co.uk.

Your home may be repossessed if you do not keep up repayments on your mortgage.