Divorce or separation and a shared mortgaged home: what are your options?
What happens to your mortgage when a relationship ends? Find out what your options are.
A separation is an emotional and difficult time, especially when you and your partner share a home bought with a mortgage. In the UK, more and more couples are facing questions about a joint mortgage once their relationship has ended. What can you do when a shared home and financial commitments are involved? Here we set out the main options and answer the key questions about your mortgage after a separation.
Option 1: Selling the property
Selling the shared home is often the most straightforward solution, as it brings the mortgage to an end and gives you both funds for a fresh start. Once the sale has gone through, you can divide any profit or loss in line with what you have agreed.
Steps to take:
- Agree on the value of the property and be prepared for the costs of selling.
- Check the cost of repaying the mortgage early if your agreement includes an early repayment charge.
- After the sale, the proceeds can be divided, taking into account each person's mortgage payments and any deposit contributions.
Selling the home settles the question of the mortgage, but it needs both of you to agree and the costs of the sale to be factored in.
Option 2: One person taking over the mortgage
If one of you wants to keep the home, you could consider taking over the mortgage. However, this is only possible with the lender's consent, and the lender will assess whether the person taking on the mortgage can afford it.
Steps to take:
- Contact your lender and explain your plan to take over the mortgage.
- Prepare documents that show you can afford the mortgage on your own.
- A valuation of the property will often be required, which will help establish what the home is currently worth.
Taking over the mortgage allows one person to keep the home, but they need to be able to manage the repayments on their own.
Option 3: Remortgaging
If one partner wants to keep the home but needs money to buy the other out, remortgaging can be a good option. A remortgage can let you release some of the equity built up in the property and pay part of it to your former partner.
Steps to take:
- Work out how much you need to buy the other person out.
- Look at what you can afford to borrow and talk to a broker about your remortgage options.
- It is worth speaking to an adviser to assess whether the new mortgage terms are right for you.
Remortgaging allows you to keep the home and pay out your former partner, but it requires the lender's approval and you will need to meet its affordability criteria.
Option 4: Letting the property
If selling the home or taking over the mortgage is not possible, you could consider letting the property. The rental income can help cover the mortgage until you are both ready to make another decision.
Steps to take:
- Contact your lender and ask for consent to let the property.
- Check whether the rental income will cover the monthly mortgage payment and the additional costs of letting.
- Agree how you will share the rental income.
Letting allows you to keep the property without having to make an immediate decision, but it requires the agreement of both of you and of the lender. Seek legal advice so that you know your rights and what steps to take if there is a dispute.
Summary
A separation and the division of shared assets are a difficult and emotional challenge. A shared home with a mortgage needs particular care, and the decision to sell, take over the mortgage, remortgage or let the property should be carefully thought through. The key is to understand the options available and to work with your lender. Whichever option you choose, it is worth speaking to a mortgage broker who can guide you through the process and help you find the best solution.
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.