Dissolving a marriage is tough enough, both mentally and emotionally. And that’s without thinking about having to untangle your financial lives too. If you and your partner have any joint investments – like a house or stocks – you’ll need to figure out who gets what. You should also look at how living arrangements will work going forwards and whether one person will buy the other out, for example.
What about a joint mortgage?
If you have joint mortgage with your partner or ex, both of your names are on the loan document. This means that even if you move out, you’re still obligated to be paying the mortgage repayments even after divorce, you can’t simply stop paying. You and your former spouse will need to talk about this and come to an arrangement that works for the both of you.
It’s critical to recall that the mortgage holder will be stuck with repayment obligations – no matter your relationship status. If you and your partner cut ties, you’re both still on the hook for mortgages payments, unless you refinance under different terms and redeem yourself of their interest in the property.
Once one partner decides to live in the family home during a divorce, they often attempt to take over the mortgage so that they are the only owner.
The most typical resolution is for one partner to buy out the other’s share of the property, thus lifting the mortgage burden from them. However, this could come with difficulties, as you must show that you can make loan payments without your former partner’s income.
What if your partner stops paying the mortgage?
If your ex-partner chooses to stop paying the mortgage after the divorce, you may need to get a court order. In this case, it may be worth seeking legal advice and speaking to your lender about the situation.
After you have decided on a course of action, remember to speak with your lender and make sure that the terms of your loan accurately reflect any changes. If you are no longer living in the home but are still listed as a co-borrower, not making mortgage payments could negatively affect your credit score.
On the other hand, if you and your ex are still jointly responsible for repaying the home loan, you may want to ensure that they can’t redraw from the mortgage or withdraw from any linked offset account without joint approval. Ideally, neither of you should take on more than half of any joint liability.
When going through a divorce, ownership of any assets, such as property, shares, artworks, jewellery, and more, are likely to be discussed and negotiated upon.
What should you do first?
A key factor in any separation is conducting a personal financial review to assess your assets and liabilities. Doing so beforehand will help stave off any potential undue financial hardships you might experience as a result of the split.
You will want to converse with both a financial advisor and lawyer to clarify your rights and responsibilities. For example, if you would like stay in the home while taking on your spouse’s mortgage share, you’ll need the funds coming in as well as some saved up to be able refinance it successfully.
If you have children or other relatives that you care for, and as a result took time off from work, this may effect your ability to make mortgage repayments. If selling the home is an option, consider doing so and splitting the profits after repaying the mortgage.
If you and your ex own a house together with a mortgage, then you’ll need to figure out who pays what portion of the mortgage as well as other various related expenses. Furthermore, if you sell the property, you have to come up with an understanding about who will take care of the financial matters. If both parties can’t agree on anything, taking this case to court might be necessary; however, it’s essential to remember that getting divorced usually comes along with different types of additional responsibilities like child support or finding another place to rent and that doesn’t even include legal fees yet.
