If you’re working out what to do with your mortgage after divorce, start with the next payment. While you are both named on a joint mortgage, the lender can ask either of you for the full repayment, even if one of you has moved out. Knowing who will make the next payment gives you time to investigate the bigger question: can one of you afford to keep the home, or would selling give you both more room to plan?
Who pays the joint mortgage while you decide?
Check the next direct debit date, the account it comes from and whether there is enough in it. If you have agreed that one person will pay, keep a record of that arrangement. Your agreement can help you manage the bills between you. Both of you remain responsible to the lender until it formally releases one borrower or the mortgage is repaid.
If the next payment looks difficult, contact the lender before it is due. Ask what support is available and how any arrangement would affect your payments and credit records. For an overview of the choices about the property, read MoneyHelper’s guide to dividing the family home and mortgage.
Can you afford to buy out your former partner?
Start with three figures: a realistic property value, the amount needed to pay off the mortgage, and the amount your proposed settlement would pay your former partner. The equity in the home is its value less any borrowing secured against it. Your family solicitor can advise how the property fits into the wider settlement. Your mortgage adviser can then check whether the borrowing that settlement requires is affordable.
A buyout on a home worth £400,000
Suppose your home is worth £400,000 and the only loan secured against it is a £220,000 mortgage. That leaves £180,000 of equity before costs. Imagine your proposed settlement gives your former partner £90,000 for their interest in the home. That figure is an assumption for this example. Your own settlement could divide the equity differently.
If you fund the entire buyout through a mortgage, you would need £310,000 before fees: £220,000 to cover the existing balance and £90,000 for the buyout. If you can put £20,000 of savings towards the payment, the borrowing falls to £290,000 before fees. Ask for a monthly repayment estimate for the amount you would actually need, allowing for the costs of running the home on one income.
Removing a name from the mortgage and the title
Ask your current lender whether it would release your former partner and, if necessary, lend the additional money. It will usually assess whether you can afford the proposed borrowing in your sole name. You can also compare remortgaging with another lender. Include any early repayment charge, product fee and legal costs when comparing the two routes.
Your conveyancer handles the change in legal ownership, often called a transfer of equity. Before agreeing a payment or moving date, ask your conveyancer and lender when the ownership will transfer, when the buyout money will be available and when the departing borrower will receive confirmation of release.
If you sell, how much could go towards your next home?
Ask the lender for a redemption figure, which tells you what it would take to repay the mortgage on a particular date. Deduct that amount, any other secured borrowing and selling costs from the expected sale price. Check which charges the redemption figure already includes so you count them only once. Your settlement determines how the remaining proceeds are divided.
Before using your expected share as a deposit, allow for legal fees, moving costs and the bills you will have as a separate household. If you plan to buy before the joint mortgage is repaid, tell your adviser. An existing mortgage commitment may affect how much a new lender will offer, even if your former partner makes the payments.
What if the sale price would leave a shortfall?
If the borrowing secured on the home exceeds its value, the home is in negative equity. Selling costs can also leave a shortfall when there is little equity. Get an up-to-date redemption figure and speak to your lender and solicitor before agreeing to a sale. Ask how any shortfall would be funded and what each borrower would still owe.
What can you check before the settlement is final?
You can ask an adviser to cost two possibilities now: keeping the home and buying somewhere else. Bring the figures below and flag anything still under discussion. That gives your solicitor and adviser a clearer picture of which proposals you can afford to pursue.
- Your latest mortgage balance, monthly payment, deal end date and any early repayment charge.
- A realistic property valuation, details of other secured borrowing and the proposed buyout or expected sale proceeds.
- Your take-home income, debts and the costs of running a separate household, including childcare and maintenance where relevant.
- The savings available for a buyout or deposit, after setting aside money for fees and moving.
If your income includes maintenance, ask what evidence a lender would need before counting it. If you work for yourself, Greenacre’s guide to applying with one year’s accounts explains what to prepare.
Frequently asked questions about divorce and mortgages
Can I Remove My Ex-Partner From a Joint Mortgage?
You cannot simply remove someone from a joint mortgage without the lender's agreement. The lender will usually reassess affordability before agreeing to release one borrower from the mortgage contract. A mortgage adviser can help you explore your options if your current lender will not agree to the change.
Do We Have to Sell Our House When We Get Divorced?
Not necessarily. One person may be able to remain in the property, subject to the financial settlement, ownership arrangements and mortgage affordability. In other circumstances, selling and dividing the equity may be the most practical option. You should obtain appropriate legal advice about your individual situation.
Can I Use My Share of the House as a Deposit After Divorce?
If the property is sold and you receive part of the equity as part of your financial settlement, you may be able to use those funds towards a deposit on another home. Your mortgage affordability will then be assessed according to your individual circumstances.
Can I Get a Mortgage on My Own After Divorce?
Potentially, yes. Getting a mortgage after divorce will usually involve an assessment of your individual income, outgoings, deposit, existing financial commitments and credit history. Greenacre can help assess your circumstances and explore lenders and mortgage products that may be suitable.
Talk through the figures with Greenacre
You can start with a question as specific as “What would it cost each month to keep this house?” Bring your mortgage balance, estimated property value and any proposed payment to your former partner. Speak to a Greenacre mortgage adviser, call 020 3393 9222 or email info@greenacrefs.co.uk.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Written by Sasha Stanworth. Sasha is a qualified mortgage adviser and co-founded Greenacre Financial Services in 2018 after more than a decade in public sector PR and communications.