What happens when a couple with a joint mortgage divorce or separate?
If you have a change in your circumstances in the shape of a divorce or separation, you should contact your lender as soon as possible, especially if you think you may struggle to meet your mortgage repayments.
Most lenders are sympathetic towards couples going through divorce or separation and may be willing to offer a payment holiday to help ease the added financial strain. This can give some breathing space to deal with the initial separation, but the original mortgage agreement will still be in place and a long term solution will need to be reached.
It should be noted that when two people take out a joint mortgage, both are agreeing to be equally liable for the debt for the duration of the mortgage, not just while they live there. Any failure to pay the mortgage on time will damage both partner's credit histories - this can be avoided if the lender is aware of the circumstances.
Going forwards, the couple can:
- Sell up and both move out - this would require the mortgage to be paid off from the proceeds of the sale.
- Transfer the mortgage into one name - this will involve one partner buying the other's share in the property, including their share of any equity involved. The person remaining will need to prove to the lender that they can afford the mortgage. If the mortgage is unaffordable, the lender will not be able to transfer it into a sole name. One thing that needs to be factored in is if the remaining partner needs to pay a share of the equity to the leaving partner.
- Continue to pay the existing mortgage, especially if there is not long left on the mortgage.
Whatever option couples considering, they should seek advice from their lender and independent advice, for example a solicitor or Citizens Advice