When marriages break down and there are children involved, a common outcome is that one spouse remains in the marital home with the children, and the other spouse continues to pay maintenance or help with mortgage costs, but will live elsewhere.
A frequent worry amongst spouses moving out of the marital home is whether the divorce and subsequent financial fallout will have a negative impact on their ability to obtain another mortgage. Luckily, the simple answer is that, as all mortgage applications are based on the credentials of the applicant and their ability to pay the mortgage, this should not be an issue as long as a person can prove they can make any payments required of them.
Once divorced you will be assessed separately to your spouse, and your application will be solely based on your ability to meet your monthly payments, and your own credit check. In some cases, lenders have specific deals aimed at those who are starting again after a marriage break up. These packages and the lenders who offer them are well worth investigation, as they will likely be more sympathetic to people in a tricky financial situation, who may remain bound to another mortgage or are trying to get back on their feet after a costly divorce.
With statistics showing that the over 50s now account for the largest increase in the divorce rate in the UK, lenders are increasingly compassionate to the unique difficulties faced by separating couples, and earlier in 2016 there was even talk of specific divorce mortgages being introduced.
As the age of divorcees rises, it is more and more likely that there will be complexities involved in a separation – it makes sense that the longer a couple has been together, the more intimately their finances will be intertwined. These mortgages would allow a spouse to borrow enough cash to buy their partner out of their mortgage, allowing them to remain in their home for a set period of time.
At the end of the borrowing period, the borrower could either sell the property, paying back the lender using equity made on the sale, or take on the full mortgage for the property themselves, if they are now financially able to.
These arrangements obviously rely on a degree of amicability and agreement – in all cases where one spouse buys out the other, there has to be a mutual agreement about one partner remaining in the home. In cases like this the mortgage could be used to allow a spouse to remain in a home for as long as the children are in full time education, and could also be a cost effective alternative to pricey renting, with an end goal in sight.
As with anything during divorce, take the time to assess your options and work out the best route for you and your spouse – avoid rushing into anything which might end up with you over a financial barrel.
You can find out more about handling your joint finances following a divorce here.Back to all articles