Married, Single, Other: How does a divorce affect getting a mortgage?

When a relationship comes to an end, dividing up shared assets between both parties can be difficult. It’s important that you both know your options so that you can make an informed decision about how to move forward and make a fresh start.

If you’re looking to get a mortgage following a divorce, you may be faced with certain obstacles along the way, particularly if you’re already named on a mortgage with your former spouse.

Mortgages can be a particularly difficult asset to divide. There are a number of options available, but it can sometimes be tricky to mutually agree on the best way to resolve your finances during a separation. In this article we’ll run through the various things that you’ll need to take into account in order to secure a mortgage following a divorce.

Responsibilities

Make sure you don’t fall behind on payments

Before you start the process of separating your finances, decide with your partner how mortgage repayments are going to be made in the lead up to any financial changes you make. Even if you plan on re-mortgaging or selling the property, you need to continue making current payments up until the house has been sold or a lender has completed any changes you wish to make.

If one of you owns the home

If the home is in just one partner’s name, the partner whose name is not included may find it easier to secure a new mortgage themselves, providing they meet all other criteria set by a lender. However, they’re also less likely to have any rights to the property they shared with their partner, unless they can prove that they contributed towards the property in some way, for example helping to make mortgage repayments. It’s worth getting some independent legal advice to see where both people stand.

If both partners have ownership

If you have joint ownership of the home, it can only be sold if both partners agree. It may be possible for one partner to buy the other partner’s share.

You’re both responsible for a joint mortgage regardless of whether you’re still living in the property or not. So even if one partner agrees to keep up repayments while the other leaves, if the partner staying in the property falls behind on repayments, both partner’s credit score will be affected.

Dividing assets

Selling the property

Selling the property and splitting the costs between those who are financially connected to it can often be the most straightforward way to move on to somewhere new. However, complications can arise if one party has placed a larger investment in the property than the other, or if each person has paid for different aspects.

Re-mortgaging

If one partner wants to stay and the other is moving out, re-mortgaging is necessary to change the property’s ownership. The person who wants to stay will have to demonstrate to the lender that they’re able to manage the mortgage payments alone, without the help of their ex-partner. If this person cannot demonstrate this, the lender is under no obligation to remove the other partner from the mortgage deed.

Moving on: How easily will I get a mortgage if I’m divorced?

Mortgages for divorcees

Getting a mortgage post-divorce can be difficult, however, not all lenders will instantly say no to you, and will provide a proper underwriting process to assess your case individually, rather than relying on computers to make a decision.

Guarantor mortgages

Whether you want to stay in the property or get a new mortgage elsewhere, if you cannot prove that you are able to meet the repayments, you could apply for a guarantor mortgage.  A guarantor mortgage requires someone you know to step in financially if mortgage repayments are not met. Typically a guarantor will be a parent or sibling, and they’ll make any mortgage payments if you’re unable to.

Considering your costs

If you want to buy your next home independently, consider how different things will be when financing your home alone, without having someone else to help share the costs. You’ll have to factor in a deposit, surveyor fees, redecorating and removal costs and most importantly, mortgage repayments. Speak to your mortgage broker to understand the associated costs with buying a home, and to determine what monthly repayments are affordable.

Starting afresh with a credit divorce

Your former partner’s financial situation can still affect you long after you separate, which is why it’s important to remove your financial association with them, whether or not you suspect that any problems may arise.

If your former partner was to land themselves in financial trouble, you may be chased for the money that they owe, even if you are no longer together. Their finances can also affect your credit rating, making it difficult to get a new mortgage or a loan.

Many divorcees assume that by getting a divorce, they are automatically separating their finances too, but this is not the case. If you’re connected through a mortgage or share a joint bank account or credit card, you will have to contact your lenders in order to change your contracts.

You’ll also have to get your connection removed from your credit report. This is called a financial disassociation and needs to be completed by a credit agency. You can ask Experian and other credit reference agencies (e.g. Equifax and Callcredit) to remove them from your credit report. Just get in touch with them and be prepared to provide proof that your financial connection has ended.

Getting a mortgage after a divorce isn’t impossible. If you’re looking for a fresh start and want to find out whether you’re eligible for a mortgage, please contact your broker. They’ll be able to discuss your personal circumstances to help you find the right mortgage.

You can find a mortgage broker by searching online or by asking friends or family for personal recommendations.  Don’t forget to check they're registered with the FCA. You can do this by searching the FCA register.

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