There are many decisions to make when a couple decides to divorce or separate. Where children are involved, arrangements to be agreed on regarding where they will live and how much time they spend with each parent. Where there is just the couple to consider, they may need to rearrange finances and possessions. In any scenario where there is a jointly owned property, there are considerations to be given to future living arrangements.
Often, a remortgage is needed, so that one partner retains the title deeds of the property and the other is able to move on without liability for the previously jointly-owned property. Where finances allow, this can be a fairly straightforward transaction, whereby one partner pays a sum to the other or agrees that the whole property is part of a settlement.
Frequently, financial constraints lead to a less simple scenario, whereby a full restructure of any existing mortgage lending needs to take place, to remove an ex-partner from the title deeds of the property and from the mortgage. If the remaining homeowner is able to afford mortgage payments and living expenses alone, then this simply mean a divorce remortgage, removing one partner and increasing borrowing to pay for the ex -partner’s share. If the property is included in an agreed settlement, a divorce remortgage can remove the ex-partner from the mortgage and title deeds, leaving the remaining partner as the sole homeowner, but also with sole liability for the mortgage.
However, it is not always possible to arrange a straightforward remortgage. There may be credit issues which cause difficulties for the remaining partner when approaching lenders. There may be young children involved, where the parent who is the primary carer is not working full time and may need to use maintenance income to fund mortgage payments. If there is no maintenance order and the couple are unable to agree, then funds available for mortgage payments may be finalised via the Child Maintenance Service (CSM), previously the Child Support Agency (CSA). Lenders are not always accommodating of either maintenance or CSM payments and this can cause frustration to couples who are already facing upheaval.
Another way to ensure that a partner with less financial resources can remain in their home, is for parents or, depending when the divorce or separation occurs, adult children, to act as a guarantor and assist with mortgage payments. It is often the case that the remaining partner might be able to afford basic living expenses, but may not be earning enough to stretch to paying a larger mortgage, which would release capital to pay their ex-partner for their property share.
Sometimes, the only way to ensure a settlement for both parties is to sell the previous marital or co-owned home and buy two new properties within the appropriate price range. Though there may still be the need in this instance for a guarantor, particularly if there are young children and an unemployed primary carer, this allows for a clean break.
There are many options for divorcing or separating couples to consider, though divorce mortgages or divorce remortgages offer the chance for couples who may be facing a lot of other change, to embrace a fresh start either in their current home, or in a new property.
