Talking to Your Mortgage Lender About Your Divorce
Whatever stage of your divorce you’re in, you are likely to have given a lot of thought to what happens to your family home. Of course, in the first instance your mortgage repayments need to be maintained – as failure to do this will harm your credit rating and make it less likely for you to be able to secure finance in the future.
Once you have decided that you and your spouse are definitely going your separate ways, you will have to decide who lives where. Normally if you are married, you will both jointly own your property. On separation or divorce, each person is entitled to a share of the equity in the property. There are several options, and it doesn’t necessarily follow that because you are divorcing you will need to sell your home.
Contacting Your LenderNearly four in ten marriages end in divorce, and mortgage companies are used to dealing with customers who are separating. If you contact them in good time, and before anything goes wrong, they are generally sympathetic and will do their best to help you. It is therefore wise to let them know that you are divorcing as early as possible so that they are aware and can offer you the best assistance.
Your FinancesIt is also worth ensuring that you have as much financial information to hand as possible. If you have not decided on how you are going to split your assets, or on maintenance payments at this stage, this may not be possible. If, however, you are able to provide your mortgage lender with an accurate financial picture this will ensure that they can provide you with the best advice.
One Person Stays in the HouseIt is possible to buy your partner’s share of the family home. If you want to do this, a surveyor will come round to value your property. The person buying the home then gives the other person half of the value of the deposit, plus half of the increase in the value of the house. Then, the person who is staying in the property meets the mortgage payments themselves. You don’t necessarily have to have the money put away in savings – you can increase the value of your mortgage to do this if there is sufficient equity in your home to do so.
Paying the MortgageThe mortgage market is becoming more aware and pro-active in offering solutions for the difficulties faced by divorcing spouses. For example, there are specialist mortgages that treat maintenance payments in the same way as they would normal income. These maintenance payments do not necessarily have to be secured by court order, but could also be by private arrangement.
If you receive working tax credits and child tax credits, or if you have a secondary income of some sort, the mortgage company may be able to take this into account when calculating whether or not you will be able to afford the mortgage payments.