Joint Property in a Divorce
The matrimonial home is generally the most important asset which needs to be dealt with upon divorce. Any jointly owned property can be quite complicated to sort out, especially where a joint mortgage is involved.
So what are the options?
What happens to a joint mortgage when you divorce?
Regular repayments for joint mortgages must continue being made as normal if the borrowers are separating or have got divorced – even if one (or both) of them have moved out.
This is the same whether the divorcing couple are joint tenants or tenants in common. Any failure to ensure that scheduled repayments are made on time, and in full, will be considered a breach of contract by the mortgage company; this can damage the credit ratings of both parties, making new mortgage applications more difficult and even potentially leading to repossession of the property.
Anyone with a joint mortgage who is planning to get divorced should inform their mortgage company immediately to discuss the best options for dealing with repayments going forward.
During a separation who pays the mortgage?
Deciding who pays for a joint mortgage during a separation or after a divorce will often be down to individual negotiation and agreement between the two parties. Any such agreement can form part of a consent order (see below). If an agreement cannot be reached, it may be necessary to go to court.
What are the options for a joint mortgage during a separation?
There are various options for dealing with a joint mortgage when owners decide to go their separate ways:
Putting the property on the market may be the best way of achieving a clean break. Proceeds can be divided to help both parties find their own homes and make a new start. Normally the money from the sale will be split 50:50 but this can be negotiated – or decided by a court.
NB: If there has been a housing crash and the property has gone into negative equity, selling up may not be an option, as it will potentially lead to hefty personal debts. In this case, it may sometimes be best to carry on paying the mortgage until the market improves.
Another common method for dealing with a joint mortgage upon divorce is for one ex-spouse (who wishes to carry on living in the property) to effectively take on the mortgage of the other party by buying them out.
This method also provides for a clean break, but it is predicated on one of the joint owners being in a financial position to take on the entire mortgage.
In marriages where there are young children, sometimes the husband will move out upon separation but carry on paying his share of a joint mortgage, leaving his wife and kids in the former matrimonial home (or vice-versa).
This arrangement can carry on upon divorce and may form part of the overall maintenance agreement. Although this does not lead to a clean break, it can work in the case of amicable breakups where one party is in a stronger financial position.
NB: In this scenario, the party who has moved out may want to remove their name from the mortgage even though they are continuing to make payments (as this can make it easier for them to get a new mortgage), but this is subject to the financial situation of both parties.
Carry on paying and living at the property
In the case of very amicable separations, both ex-spouses may decide to carry on paying off their joint mortgage whilst living together in the same home as friends.
This is an increasingly common scenario in today’s inflated housing market, where it is often impossible to get a mortgage without a partner or live independently. There is obviously no clean break but this is a straightforward option.
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What are Mesher and Martin orders?
Divorcing couples with young children can obtain – or ask the court to impose – a Mesher Order, also known as an ‘order for deferred sale’. This basically prevents the matrimonial home from being sold until a ‘trigger event’ such as children reaching the age of 18.
A Martin Order is the same as a Mesher Order but designed for those without children.
What is a consent order?
A consent order essentially provides legal standing to an agreement between a divorcing couple, providing them with a method of enforcing the agreement later down the line.
This can be particularly useful in the scenario mentioned above relating to maintenance payments, where there isn’t a clean break. A consent order can also enforce a divorce settlement to prevent one party making financial claims on their former spouse at some point in the future.
Clean break consent orders are vital in divorce proceedings, especially when there is property is involved. However, many divorcing couples are put off due to the prices high street solicitors charge.
We offer a Managed Consent Order Service for just £299, saving you on average over £1,137, without compromising on the service you receive.
You can include your decision in regards to property within your financial consent order and make it legally binding.
Choosing this service will save you time & money with the right advice, the first time.
No need to take time off work
No need to attend court or our offices
Everything is completed online
A qualified & experienced solicitor will draft your individual consent order.