What happens with a joint mortgage when you split up?

October 29, 2020
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The breakdown of a relationship is stressful enough at the best of times, but when you hold a joint mortgage together, it can become more difficult to navigate. Whether you are married or unmarried, the law is very clear on how a joint mortgage should be managed when you split up. Put simply, you are both jointly responsible for the mortgage payments, so you need to find a way to come to an agreement quickly.

If the home is not affordable for one person living alone, then you will need to make plans for a quick sale. If one person moves out and refuses to pay their portion of the mortgage, the home could be at risk of being repossessed. In this guide, we will look at some of the options you have for navigating these choppy waters.

What are the options after a split?

If you are heading for divorce, you have a few options with regards to your property.

  • Sell the home. The first option is to put your home on the market, pay back the remaining mortgage and split the proceeds. If one person contributed more money, for the deposit, for example, this will need to be settled in your divorce financial settlement.
  • Buy out your ex. If you want to stay in the home and take over the mortgage, you will need to buy out your partner. This might involve taking out a loan to buy out their stake of the equity.
  • Keep a stake in the property. If one partner is going to continue living in the home and finish paying the mortgage, the other should be awarded a stake in the home equal to their share of the equity. So if you own 80% of the home, they will be entitled to 40% of the value when it is sold.
  • Finish paying the mortgage. If you have almost paid off your mortgage and your separation is amicable, it would make sense to complete your payments. Once you own the home outright, you can split the proceeds of the sale down the middle.
  • Secure a guarantor. If one partner wants to remain in the property but cannot buy out the other, you could remortgage with a guarantor and give the other partner their share of the equity.

What if there are children involved?

When there are children involved in the separation, it may be in their best interests to stay in the family home. The parent staying in the home can apply for a Mesher order to prevent the home from being sold for a set amount of time. This is usually until the youngest child turns 18. The property will stay in both parties names, even if one isn’t resident in the property.

How can your lender help?

If you are concerned about being able to pay the mortgage alone while you navigate your separation, speak to your lender. Rather than allowing your repayments to fall behind and risk repossession, find out if your lender can offer any support. They might be able to restructure the mortgage or give you a payment holiday. Remember that you will still be charged interest during this time, so this will lengthen the term of your mortgage and increase the total amount you have to repay.

What if the separation isn’t amicable?

Be sure to protect your rights to the property and make sure you are listed as a co-owner on the HM Lands Registry. This will prevent the property from being sold without your knowledge. Rest assured that nothing can happen to your property without your knowledge. Speak to your mortgage provider if you are concerned.

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