Mortgages and divorce; everything you need to know

There is nothing pleasant about divorce; in most cases, it is downright awful. You will run through the entire gamut of human emotions while dealing with all sorts of unpleasantries, such as ironing out living arrangements, parenting duties, and the heartbreak that entails. The emotions that come with a divorce are often intense, pushing matters of finance and other associated legal proceedings into the background.

Adding a mortgage into this tumultuous mix is enough to send anyone spiraling downwards into stress and worry. But it shouldn’t be this way. A divorce is a normal occurrence of life, an unfortunate happening that sometimes, well, had to happen. Focussing on the wellbeing of you and your family should be your main concern, not worrying about a mortgage.

The first concern you may have is ‘what happens to the house?’ If you hold joint tenancy on a home, the mortgage will still need to be paid, regardless of who stays in the home. In the case of a divorce, how property and the obligations owing to it are split depends on several factors such as:

• Ownership contributions from each party, this includes mortgage payments, home improvements, lump-sum repayments, and stamp duty.
• How long the two parties have been in a relationship
• The future income of each party
• Non-monetary contributions such as spending time raising children

For relationships over 12 months in length, both parties are entitled to a share of assets, unless prenuptial agreements where signed. At a deeply personal time in your life, it feels impersonal to reduce a former relationship to a percentage of assets. For your sanity and that of your ex-spouse, you will want the mortgage sorted out smoothly and painlessly, so what are your options?

Keep on keeping on.

What if you and your ex-spouse found the best home loan rates in the country, and secured an amazing home loan? It would be simple to keep paying off this home loan, and in theory, you could both still make the repayments until the debt is gone. Keeping the house together while being separated might not always be viable, and in most cases the property is sold instead.

If you or your ex-spouse want to keep the property, you must refinance your mortgage. To refinance and take on the mortgage, you must meet the lender’s requirements for doing so. Because you are taking on a mortgage with a single income, you may incur lenders’ mortgage insurance fees.

Goodbyes.

In some cases, refinancing a mortgage can be beneficial; you can renegotiate a better deal and gain more money management features. In the wake of a divorce, it is often better to sell the property and split the assets accordingly.

Selling your home means no messy mortgage and a less complicated dividing of assets. By saying goodbye to your home, you can remove emotional baggage and begin a new journey.

Getting help.

Going through a divorce is complicated, uncomfortable, and painful; no one should have to deal with it alone. Now is a time to reach out to loved ones, and please, don’t be afraid to seek help from a mental health professional. Your mental wellbeing is far more important than home loans and settlements.

Divorce can also be expensive; if things get messy, you could be in for a long and wallet-draining ride. There are professionals who specialize in money management in the wake of a divorce if you are unsure how to proceed, seek help.

If you are going through a painful divorce, let the professionals deal with the mortgage. Talk to your lender as soon as possible and discuss your options. Forget dealing with complicated paperwork and legal jargon, spend your time with loved ones and find your happiness in new beginnings instead.