What happens to the home if you’re divorcing or dissolving your civil partnership?
If you and your ex-partner lived together in the family home, it would be considered a joint asset. This means you both have a legal right over the home until the divorce is finalised, regardless of whose name is on the deed and nobody can be forced to leave the home without legal intervention. If the family home is in your ex-partners name and you’re trying you preserve the right to stay in the home, or prevent it from being sold by your ex-partner while you still occupy the home- you can register your ‘home rights’ with HM Land Registry, you can only do this if they are the sole owner.
You move out and sell the property:
If you sell the home, you can pay off any remaining mortgage arrears and divide any money left over from the sale appropriately. Money gained from the sale could be used to put down a deposit on a new property.
You can buy your ex out of the property:
If you or your ex-partner have a joint mortgage and one wishes to buy the other out of the property, you’ll need to work out the fair percentage of the property each of you own. This can be done by agreement between yourself and your ex-partner, or by mediation through a court if you’re struggling to reach a mutual agreement. Once you’ve figured this out, whoever wishes to keep the property would ‘buy’ the other out of property and assume full ownership. The mortgage lender will need to be satisfied that the person remaining in the property will be able to keep up mortgage repayments. Usually, the lender would agree to allowing one of the partners to have a sole mortgage but if affordability is an issue the partner keeping the home could look at seeking a guarantor mortgage- where a suitable relative agrees to make repayments if you are unable.
If you’re looking to remortgage to raise money to buy your ex-partner out of your current property, we could help. Get in touch with one of our expert mortgage advisors.
Leave the home and mortgage as is:
You could choose to continue living in the home and not change ownership. This could be an option if you have children under 18 or still in school however isn’t always financially viable, as yourself or your ex-partner might have to seek a new home and the expenses that come with it. It would also rely on you maintaining a good relationship with your ex-partner and repayments must be made on time and as usual.
One of you could retain a stake in the property:
You could transfer part of the value of the home, meaning that one of you would own most of the home but the partner who gave up some of their share of the property would still retain a stake in the home- so that when the property is sold, they would still get a percentage of its value. This can make sure your children have a place to live until they turn 18 or leave home.
You could finish paying off the mortgage:
If you have very little left to pay on your mortgage it might be simplest to continue paying the mortgage, this means you could sell the home once the mortgage is paid and divide the full proceeds.
What if we have a joint mortgage and are separating?
If you have a joint mortgage, or any joint-credit with your ex-partner, your credit files will be linked. Most couples choose to separate the mortgage and remove the financial ties. If one of you chooses to stay in the property, it would mean the partner who stays in the house doesn’t have to rely on their ex-partner for the mortgage. The partner who leaves the home should be able to borrow more for a new property with their name removed from the joint mortgage, as that would provide more free income.
If you have children and are divorcing or dissolving a civil partnership?
If you and your ex-partner have children together, you’ll need to prioritise their needs. It’s often the case that the primary caregiver of the children remains in the family home after a divorce or dissolution with the children, at least until they turn 18 or leave home. This isn’t always affordable or viable though, and each family is different so there’s no set path of managing a separation, but if you’re struggling to come to an agreement you could consider mediation.
Keeping in touch with your lender:
It is absolutely vital that you keep up all mortgage repayments until you’ve come to an agreement on what will happen with the family home. Make sure you inform your lender that you’re going through a separation and keep in touch. You’ll need to check with your lender and have their agreement before transferring any ownership if one of you decides to stay in the property as your lender will probably have their own affordability checks they will want to carry out.
Court and disagreements?
If you’re still unable to come to an agreement after mediation and your separation isn’t proving to be amicable, you might be considering going to court. The courts will take into consideration both of your circumstances when ruling on what will happen with your family home. If there are children involved, then the safety and well-being of the children will be the priority concern of the courts when making a decision.
When court seems likely, it’s usually recommended to seek legal advice to support you through the court proceedings.
Mesher and Martin orders:
You could have the option of taking out a Mesher or Martin order if you live in England or Wales:
A Mesher order is a family court order that stops the home being sold for a set period of time, usually because there are children still living in the home.
If you take out a Mesher order, one of you can stay in the property with the children until the set period end, usually when the youngest child turns 18 or finishes education. The property stays in both owners’ names for this time, even if only one person is currently living in the property.
A Martin order is similar to a Mesher order, but children aren’t often involved. In this case, one of you could stay in the property for the rest of your life – and the home would not be sold until that person moves out, remarries or passes away.
This is so long as the other partner does not immediately need the money.
What if my house is in negative equity?
If your home is in negative equity, it can make the separation process slightly more difficult, but not unmanageable. A property being in negative equity means that the current value of the home is less than the value outstanding on the mortgage loan. As the sale of your house won’t be enough to pay off the mortgage in full, both yourself and your ex-partner will need to decide what to do.
You can sell the house and split the remaining mortgage debt, or continue making mortgage payments and see if market conditions improve. There are ways to increase the value of your property which could help boost the equity in your home.