Understanding Your Mortgage Options When a Marriage Ends
Article Summary
Divorce or separation can leave you facing difficult decisions about your home as well as your finances. Depending on your circumstances, you may be able to remain in the family home and buy out your former partner, sell the property and divide the equity, or sell and use your share towards a deposit on another home. If one person keeps the property, the existing mortgage may also need to be transferred or replaced with a mortgage in their sole name.
Greenacre Financial Services can help you understand what may be affordable and find a suitable mortgage after divorce for your next step.
Divorce and Home Loans: Where Do You Start?
The end of a marriage or civil partnership can bring considerable change. Alongside the emotional impact, there are often important practical questions to answer about your finances, particularly when you own a home together.
For many couples, the family home is their largest financial asset, but it may also have significant emotional importance. Deciding what happens to it can therefore be one of the most difficult parts of a separation and divorce.
You do not necessarily need to have all the answers straight away. However, understanding your mortgage position and what may be financially achievable can help you make more informed decisions.
Greenacre Financial Services can assess your circumstances, including your income, existing mortgage, property equity and financial commitments, to help you understand the mortgage options that may be available.
What Happens to a Joint Mortgage After Divorce?
If you have a joint mortgage after divorce, separating does not automatically change the mortgage agreement.
While both names remain on the mortgage, both borrowers remain responsible for the repayments, even if one person has moved out of the property. Your mortgage lender will also need to approve any changes to the mortgage contract, including removing one borrower.
This means that agreeing between yourselves that one person will take responsibility for the mortgage is not, by itself, enough to remove the other person’s obligations to the lender.
Your mortgage arrangements will also need to be considered alongside the wider financial settlement. A solicitor can provide legal advice on matters such as ownership rights, matrimonial property and how financial assets should be divided, while a mortgage adviser can help establish whether the proposed mortgage arrangements are financially achievable.
Splitting the House in a Divorce: What Are Your Options?
There is no single solution when splitting the house in a divorce. The right route will depend on your financial settlement, the amount of equity in the property, affordability and what both parties want to do next.
Some of the main options include the following:
One Person Stays in the Family Home
One partner may want to remain in the marital home and buy out the other’s share. This can be particularly important where children are involved and maintaining some continuity is a priority.
The first step is usually to understand the property value, outstanding mortgage and available equity. You can then begin to establish what buying out your former partner might involve.
If you want to take responsibility for the home yourself, the lender will need to be satisfied that you can afford the mortgage based on your individual circumstances. This may involve remortgaging and a transfer of equity.
Crucially, being able to afford the existing monthly payments does not necessarily mean the lender will agree to transfer the mortgage into your sole name. An affordability assessment will usually be required.
Greenacre can help you explore suitable lenders and establish whether keeping your existing home could be a realistic option.
Sell the House and Divide the Equity
Sometimes neither person can, or wants to, remain in the family home. In these circumstances, selling the property may provide a clearer financial break.
Once the house is sold and the outstanding mortgage and associated costs have been dealt with, the remaining equity can be divided in accordance with the financial settlement agreement.
Your share could potentially provide a deposit for another property.
Although selling a family home can be an emotional decision, it may give both people the opportunity to establish separate homes that are more affordable based on their new financial circumstances.
If you’re considering this option, Greenacre can help you understand how much you might be able to borrow independently and what deposit and repayments could be required before you begin searching for another property.
Transfer the Mortgage and Ownership to One Person
Where one person keeps the property, a transfer of equity may be used to change its legal ownership.
However, changing the ownership of the property and changing the mortgage are connected but separate issues. If there is a mortgage on the home, the lender will need to agree to release the departing borrower from their obligations.
The person remaining in the property will usually need to demonstrate that they can meet the lender’s affordability requirements alone.
This is why obtaining expert advice early can be useful. It can help establish whether the proposed arrangement is likely to be achievable before plans progress too far.
Remortgage as Part of a Divorce Settlement
Remortgaging may be another option following separation.
Depending on your circumstances and the agreed settlement, it could potentially allow you to move the mortgage into one person’s name, restructure your borrowing or release equity to help buy out a former partner.
Whether this is suitable will depend on factors including your income, property value, available equity, existing loan, affordability and lender criteria.
Rather than assuming your existing mortgage lender is your only option, Greenacre can explore the wider mortgage market to identify products and lenders that may be suitable for your new circumstances.
What If Your Home Is in Negative Equity?
If the outstanding mortgage is greater than the current value of the property, your options may be more limited.
Selling the house may leave a mortgage shortfall, while transferring the property to one person could also present affordability challenges.
If you’re facing negative equity during a divorce, it is particularly important to understand both the legal and mortgage implications before making decisions. Appropriate legal and expert mortgage advice can help you establish what options may be available.
Unsure what happens to your mortgage after divorce?
Whether you hope to stay in the family home, buy out your former partner or sell and purchase somewhere new, understanding what you can realistically afford is an important first step.
Speak to Greenacre Financial Services to explore your mortgage options and get clarity on what may be possible.
Buying Another Home After Divorce
Starting again does not necessarily mean starting from scratch financially.
If your previous family home is sold and you receive a share of the equity, you may be able to use this towards the deposit on your next property. Alternatively, your financial settlement may provide other assets that affect your overall position.
The challenge is that your income, outgoings and household finances may all have changed.
A mortgage adviser can assess your new circumstances and help you understand:
- how much you may be able to borrow
- how much deposit you could need
- what monthly repayments may look like
- which mortgage lenders may suit your circumstances
- what property budget could be realistic
Greenacre has access to a wide range of lenders and mortgage products, helping you look beyond the options available from an individual bank.
If you do not have a substantial deposit available after your divorce, there may still be mortgage options worth exploring. In some circumstances, a no deposit mortgage could provide another route to buying a home.
Your employment circumstances will also influence the mortgage options available. If you’re self-employed and concerned that a limited trading history could affect your application, find out more about whether you can get a mortgage with one year’s accounts.
Should You Speak to a Mortgage Broker Before the Divorce Is Finalised?
You do not necessarily need to wait until everything is finalised before discussing your mortgage options.
In fact, understanding what is financially possible at an earlier stage can sometimes provide useful information for wider discussions.
For example, you may hope to remain in the family home and buy out your spouse. Before assuming this is achievable, it can be helpful to understand whether you are likely to qualify for the required mortgage based on your income and circumstances.
Similarly, if the house is likely to be sold, getting an indication of your future borrowing potential can help you understand what buying another home might look like.
Mortgage advice does not replace legal advice or determine how assets should be divided. Instead, it can provide practical information about the lending and affordability implications of the different options being considered.
How Greenacre Can Make the Mortgage Process Easier
When you’re dealing with a separation, the last thing you need is unnecessary confusion about your mortgage.
Greenacre Financial Services provides independent mortgage advice and can help you understand your position without assuming that one particular route is right for you.
Depending on your circumstances, we can help you:
- review your existing mortgage
- understand your borrowing potential based on your new finances
- explore whether keeping the family home may be affordable
- consider remortgaging and transfer of equity options
- explore suitable lenders if you need a mortgage in your sole name
- assess your options if the existing property is being sold
- find a suitable mortgage when you’re ready to buy your next home
Most importantly, you can explore the different possibilities before committing to a particular mortgage route.
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.
Take Your Next Step With Greater Clarity
You may not yet know whether you’ll remain in your current home, sell and buy somewhere new, or restructure an existing joint mortgage. That’s understandable. There can be a lot to work through during separation and divorce, and your mortgage is only one part of the wider picture.
Getting a clear understanding of what you can realistically afford can make the next decision easier.
Whether you’re hoping to keep your family home, need to understand a joint mortgage after divorce, or are considering buying somewhere new, Greenacre Financial Services can help you explore your options and find a suitable mortgage after divorce for your circumstances.
For more information about any of our services, including mortgage after divorce, please do not hesitate to get in touch by calling us on 0203 3939 222 or email info@greenacrefs.co.uk.
Written By: Sasha Stanworth
Author Bio: Sasha co-founded Greenacre Financial Services in 2018 after over a decade in public sector PR and communications. A fully qualified mortgage advisor, she’s passionate about helping first-time buyers achieve homeownership. Sasha also oversees Greenacre’s daily operations and team, ensuring clients receive consistent, high-quality service.