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With interest rates and the cost-of-living crisis in the headlines on a daily basis, mortgage affordability is a key concern for many homeowners, not least for couples who are separating and wondering how this will affect their mortgage arrangements.
Most divorcing couples will have a mortgage on their family home, and the family home is likely to be their largest asset. The mortgage may be in joint names, or it could be in one person’s sole name. Either way, the house will be considered a matrimonial asset if it is the family home, and it will need to be dealt with as part of the financial settlement.
Whether a mortgage is affected by divorce or the dissolution of a civil partnership, and the extent to which it is affected, will depend on the terms of the financial settlement or any court order.
‘Most couples prefer to negotiate a clean financial break so that they have no ongoing financial ties, but if you have a joint mortgage then you and your partner will be both jointly and severally liable for that mortgage until it is either repaid or transferred into one person’s sole name,’ says a solicitor in the family team.
Common Routes for Handling the Matrimonial Home and Mortgage
There are typically three ways in which a former matrimonial home will be dealt with when a marriage or civil partnership ends, each with respective arrangements for the mortgage. Some couples may also need to take additional steps if their home is in a position of negative equity.
1. Selling the Former Matrimonial Home
If you decide to sell your home as part of your divorce, then typically an estate agent will be jointly appointed by you both to achieve the best sale price. Once the sale is agreed, the solicitor acting for you will obtain a redemption statement from the mortgage company to find out how much money is left to pay. Once the sale completes, the solicitor will redeem the mortgage in full so that neither of you have any further liability or obligation to the mortgage company.
2. Keeping the House
If You Are the Sole Owner:
If Your Spouse Is the Sole Owner:
If the Mortgage Is in Joint Names:
3. Your Spouse or Civil Partner Keeps the House
If You Are Not an Owner:
If the House Is in Your Sole Name:
If the Mortgage Is in Joint Names:
What If the House Is in Negative Equity?
Negative equity means that more money is owed to the mortgage provider than the amount the house has been valued at. If your house is in negative equity, the mortgage company is unlikely to release either of you from being responsible for the payment of the mortgage.
How We Can Help
One of our family law experts will be able to advise you on the options available to you regarding your mortgage during a divorce. We can weigh up the routes available to you and help you obtain the right legal and financial advice to best meet your future needs.
For more information or advice on family law matters, readers are encouraged to contact the legal team at southgate solicitors at 02080040065 or [email protected]. It’s important to note that the content of this article is general information and not legal advice, and readers should seek independent expert advice for their specific situations. Our experienced team at southgate solicitors is here to provide expert guidance and support.
Send your details to us and we will call you back to take further information about your matter, or you can click the number below.
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