Divorce is a sad reality that many couples face, and it can have a big financial impact.
When a couple gets married, one of the biggest financial commitments they may share is a mortgage. When they divorce, they have to decide what happens to their joint mortgage and how they will manage payments moving forward.
In this blog, we will explore what happens to your mortgage if you get divorced and what options you have.
Do I still have to pay my mortgage after divorce?
First, it is important to understand that a joint mortgage is a shared commitment. When two people take out a mortgage together, they are both agreeing to be responsible for making repayments on the loan. So, if you get divorced, you are still responsible for paying the mortgage, unless you can both come to an agreement.
What options are available to me?
If you are both named on the mortgage, there are some options available to you.
Each option will depend on your circumstances. It is important to remember there is no one size fits all solution. Here are some possible options you could consider:
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Sell the property and pay off the mortgage
One option is to sell the property and use the proceeds to pay off the mortgage. This may be the best option if neither of you can afford to take on the repayments alone or if you both want a clean break from each other. After the mortgage has been paid off, any remaining equity would be shared between you both.
However, it is worth noting that selling a property can be a lengthy and complex process. It is important to seek professional advice to make sure you understand your options. You may need to get the help of an estate agent to sell the property. There may also be extra costs associated with the sale, such as legal fees.
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Transfer the mortgage to one person
Another option is for one of you to take over the mortgage and buy out the other person's share of the property. This would involve one person refinancing the mortgage in their name.
To refinance, the person taking over the mortgage will need to apply for a new mortgage. This will involve an assessment of their creditworthiness and affordability. They need to be able to prove that they can afford the monthly payments on their own. Before this can occur, they will need to buy out the other person's share of the property.
However, this option may not be possible if the person wanting to take over the mortgage cannot afford to make the repayments alone. If the individual cannot afford the monthly payments, they may be required to sell the property.
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Continue to share the mortgage payments
If you and your ex-partner are on good terms and want to keep the property, continuing to share the mortgage payments may be an option. This can be a good option if the property is a valuable asset and it would be difficult for one person to buy the other out.
If you choose to continue paying the mortgage jointly, you will need to come to an agreement with your ex-partner about how the payments will be made. This may involve setting up a joint account to cover the mortgage payments or agreeing to split the payments between you each month.
However, this can be risky since both parties will be responsible for the debt and any missed payments could affect both credit scores. It can also become complicated if one person wants to sell their share of the property in the future. Seek professional advice to understand the risks and potential challenges before making a decision.
These options are only needed in the case of a joint mortgage. If one person in the relationship has a sole mortgage, only they are responsible for the payments after divorce. Some couples choose to have the mortgage in one person’s name if the other has a very poor credit history and is unable to be approved.
Summary
Getting divorced can be a difficult and emotional time, and it is important to seek professional advice to make sure you understand your options. If you have a joint mortgage, you will both be responsible for making repayments on the loan unless you come to an agreement to sell the property or transfer the mortgage to one person.
