Getting divorced or splitting up with your partner when you have an outstanding joint mortgage can be difficult. We explain your options.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
If you’re getting divorced or breaking up from a long-term partner, sorting out your finances can be a real headache. If you’ve got a mortgage together, it’s essential that you’re aware of your options so you can make the right decision.
If you are going through a divorce and both you and your ex-partner’s name are on the mortgage, you are both responsible for paying the mortgage until a financial settlement is reached. This is true, even if one of you has moved out of the family home.
When two people take out a joint mortgage, both agree to be equally liable for the debt until the mortgage is paid off, not just while you live in the property.
Missing payments will damage your credit score and that of your ex-partner’s. In the worst case, it could lead to repossession of the property. You should also be wary of forcing your ex-partner to pay more than you do, as this can be used against you in any future financial dispute.
What happens to a joint mortgage during a divorce?
As soon as you know you will be separating, let your mortgage lender know, especially if you could struggle to meet your mortgage payments.
Banks are usually sympathetic towards couples going through divorce or separation and may be willing to offer you a payment holiday to help ease the added financial strain.
This can give you some breathing space to deal with the initial separation.
However, the original mortgage agreement will still be in place, and a long-term solution will need to be reached.
You should also talk to your solicitor. If you are moving out of the family home, you may be able to have your name removed from the mortgage, but you need to be sure this won’t result in you losing out on your share of the property. If your ex-partner is moving out and wants their name removed from the mortgage, you’ll need to be able to keep up with the repayments on your own.
It can be a challenge working out how the home should be divided if you’re getting divorced. Generally, there are four options open to you:
If you both move out of the property, you can sell the house and pay off the mortgage. Selling is often the neatest way of moving on after you separate.
In these circumstances, any equity left after the mortgage has been paid off will be considered a marital asset and split between the two of you.
Exactly who gets what from the leftover funds can be open to dispute. Agreeing between the two of you who gets what is often the quickest and cheapest solution.
If you cannot reach an agreement, then the matter will need to be settled in the divorce court, in which case you need to get legal advice about your rights.
If you move out and buy a new property, you can compare mortgage deals here.
If one of you wants to stay in your formerly shared home, you could continue paying the existing mortgage between you, especially if you have nearly paid it off and you’re still on good terms after the divorce.
Continuing with the mortgage can also be a good option if you have children because it avoids them having to move out of the family home. However, you might need to set up a Mesher Order through the courts. This will state that the home cannot be sold until after a certain time or a specific event – for example, after the children have left school. At this point, the property would be sold and the sale proceeds divided between you.
Before choosing this option, you will need to make sure that both you and your partner can continue to afford to pay the mortgage and any other living costs.
Another option if one of you intends to stay living in the home is to transfer sole ownership to the occupier.
Transferring the mortgage into one name will involve one partner buying the other’s share in the property, including their equity.
You will need to prove that the occupier will be able to afford the mortgage on their own – remember, the existing lender is under no obligation to remove either of you or to transfer the mortgage to one name.
If your lender believes you can afford the mortgage, it may agree to you becoming the sole mortgage holder.
You will then need to buy your ex-partner’s share in the property before the mortgage can be put into your name. This may involve getting the current value assessed to determine the level of equity in the property.
4. Transfer part of the home’s value
You could also transfer part of the property’s value from one partner to the other as part of the financial settlement. This would mean that the partner who gave up a share of their ownership rights would still maintain a stake in the home and would then be entitled to a percentage of the property’s value when it is sold.
If you get divorced while your joint home is in negative equity, you can’t pay off the mortgage in full by selling your home.
You might have to split the outstanding debt between you or come to an arrangement with your mortgage provider.
Speak to your mortgage provider to discuss your options or get independent legal advice.
If you need to get a new mortgage, compare deals you can get with negative equity.
Here are all of your options if you are in negative equity.
If you are separating from your partner and your name is not on the house’s mortgage or deeds, that does not mean that you have no rights or claim on the property.
When it comes to divorce in the UK, the marital home is considered a joint asset, and you cannot be forced to leave by your partner.
If your name is not on the mortgage or deeds, you can register your matrimonial rights through the Land Registry to stop your partner from selling without your consideration.
However, if your partner owned the property before your marriage, you will have little legal claim to it during divorce proceedings.
If you find yourself in this situation, you should seek legal advice to determine where you stand.
The right solution for you depends on your circumstances. For example, if no children are involved, then selling the property and cutting your losses may prove the best option.
But if your property is the family home, either you or your partner may want to continue living there to reduce the impact of the divorce on your children.
Whatever option you are considering, you should seek independent advice.
You could use a solicitor, or several charities and other organisations can explain what you will need to do and point you in the direction of legal advice if required. Contact Relate or Citizens Advice for help.
You could also discuss your financial options with an independent financial adviser; here is a look at how to find one you can trust.
If your divorce has not been amicable and you disagree over who is entitled to what, you may have to go to court.
You should be aware that a simple 50/50 split rarely occurs when the courts hear divorce proceedings.
Courts consider a wide range of circumstances when deciding what happens to the marital home.
If children are involved, their well-being will be the court’s primary concern. They will also consider both parties’ financial circumstances when making a decision.
If your divorce has reached this stage, you will need to seek independent legal advice. This can be a time-consuming and expensive undertaking, but it is the only realistic option if you go to court.
You could avoid these costs by agreeing as much as possible beforehand. Try using a third party, like the Family Mediation Council, who may be able to help.
You will also need to work out how to split the rest of your finances when you get divorced. For example:
Pensions - these are often overlooked as they are long-term accounts, but they are often worth more than the house
Your savings and investments – ISAs, savings accounts or shares
Money you owe – credit card debts, overdrafts or loans
For step-by-step information on coping with the financial impact of divorce or separation, take a look at our guide to getting a fair divorce settlement. It is also worth reading how to separate your finances from your ex-partner.
Moving your joint mortgage into just one name can provide the same financial break as selling up while keeping ownership of your existing home.
If you need to borrow money to purchase your partner’s share, you will need to prove that you can afford the additional borrowing.
Alternatively, you can move out and sell your stake in the house to your partner in the same way.
If there is some dispute over the property’s value or how much equity your partner is owed, you may have to ask a court to negotiate a settlement.
Yes, you need buildings insurance to get a mortgage on most property types, but you might also need other types of cover. For example, income protection insurance can cover your mortgage payments if you lose your job. This protection can be beneficial if you take over your mortgage payments on your own.