What are your options when getting a mortgage after divorce?
Statistics show that 42% of marriages in the UK end in divorce. Although these statistics are very high it is not unsurprising. When getting a divorce there is many factors that will cross your mind. One of the most prominent factors that both parties will be considering is the family home.
Here at Mortgage Squared we work with divorce on a regular basis. We show them what they can afford and how they can either stay in their current home or move into a new property.
Can a Mortgage Be Transferred in a Divorce?
A mortgage can be transferred in divorce proceedings, but this is all dependent on your personal circumstances. As every financial situation is slightly different and divorcing can make this even more complex. Transferring a mortgage after a divorce could be done when one spouse owns the mortgage. But the other spouse has been awarded the homes equity in divorce proceedings. In this case the mortgage must be transferred over to the appropriate spouse. This can be an in depth process as mortgage lenders will want to underwrite the mortgage to ensure that affordability is there. Also that the risk lending the money has not been increased. Speaking to a fully qualified mortgage advisor is crucial to getting advice when looking into this.
What Happens To Your Home In a Divorce?
During the process of a divorce you will be looking to split shared assets between both partners. The main asset that is commonly shared between both partners is property in the form of the family home and buy to let properties.
What Are My Options When Going Through a Divorce?
There are two common options when going through a divorce and what to do with the family home.
Buying Your Ex Partner Out After Divorce
This is the more preferred option of the two, especially when children are involved. Neither partner want to add additional uncertainty to their children.
How Does Buying My Ex Partner Out Of The Family Home After Divorce Work?
This involves transferring the deeds from joint names to sole name and with one partner remaining in the home. In most cases at the stage of divorce the family home still has a mortgage on it. This needs to be considered carefully.
First steps are to arrange independent valuation of property and request a copy pf your latest mortgage statement. This is to get an accurate settlement figure on the loan. Once you understand what the property is worth you can take the value minus the outstanding mortgage and the amount remaining is the equity you hold in your home.
Every divorce proceeding is slightly different, and it is not always a 50/50 split of the equity and assets. In some circumstances it has been as much as 80/20. Depending on what your solicitor and the courts have agreed you can then easily work out the amount of equity you need to give to your partner to buy them out of the property. You then change the deeds in to sole names.
How Do I Finance Buying My Ex Partner Out Of The Family Home?
This is done by applying for a new mortgage in your sole name. This will be treated as a brand new mortgage application so it is always a good idea to contact a qualified advisor who can help you understand your options. Mortgage Squared take the time to understand your individual needs and look at the most suitable options for your personal circumstances.
Selling The Family Home After Divorce & Buying a New Property
There is many reasons why you may have to sell your family home it could be a want or a need. After selling the family home you are normally presented with two options buying a new home or renting a property.
If you are looking to buy a new home understanding what you can afford to borrow is the first step. This allows you to start getting an understanding of what type of property you can purchase. This is where a mortgage advisor can come in there is many calculators available online to work out mortgage payments. But post divorce, there is now even more things to consider when working out your potential mortgage borrowing.
You could be reviewing maintenance or paying maintenance, eligible to new state benefits or reducing your hours due to increased commitments. All these things effect your affordability and the amount you can borrow on a mortgage in different ways.
What Is a Mortgage Capacity Report? & Why Do I Need One?
When you are going through and there is a mortgage involved, the courts will no request a mortgage capacity report. This report is a detailed investigation into the level of mortgage borrowing you are likely to be able to obtain post divorce. The mortgage capacity report does not recommend a specific lender. It will provide illustrations and indicative interest rates so that the courts can understand your affordability when deciding on splits of assets etc.
Mortgage Squared can arrange an appointment with a compassionate qualified mortgage advisor who can help you further.
Please ring 08081 551 807.
Mortgage Capacity Reports are not part of the Openwork offering and are offered in our own right. Openwork Limited accept no responsibility for this aspect of our business. Mortgage Capacity Reports are not regulated by the Financial Conduct Authority.
If you need to speak to someone who will be able to help you further then mortgage Squared are here to help – 08081 551 807