Remortgage After Separation: Your Options

This guide provides information on the impact of separation on mortgages and includes solutions such as payment liability, selling a home, buying out a partner, obtaining a new mortgage, and other related issues.

An Overview

Many people do not anticipate going through a separation and, therefore, do not typically plan their mortgage with that possibility in mind. Luckily, there are solutions.

A change in mortgage arrangements can be caused by various factors, with separation being one of the more stressful reasons. The process can be quite costly and is often a personal one. Typically, they lead to the redistribution of assets and income. In many cases, the home is sold as both partners look for new living arrangements.

It is advisable for both partners to seek independent financial planning and tax advice to ensure the best possible outcome. It is important to carefully review the mortgage options available and consider all possible choices.

Can You Separate From Your Partner if You Have a Joint Mortgage?

Having a joint mortgage does not necessarily prevent couples from separating or getting divorced. Both parties will remain on the mortgage and share equal responsibility for making monthly payments until a financial settlement is reached and a new arrangement is put in place.

It is important to notify your mortgage lender if you intend to separate in order to explore available options for managing mortgage payments. Your lender may offer options such as a repayment holiday or extending the mortgage term to assist with short-term payment difficulties. It may still be necessary to consider refinancing or downsizing in the long term.

It is crucial to ensure that monthly payments are made consistently, even if one party has moved out of the property. Failure to make payments could lead to repossession of the property and have a negative impact on both parties’ credit scores.

Who Pays a Joint Mortgage After a Separation?

After a separation, both parties are still held accountable for paying a joint mortgage unless a formal agreement has been reached between you and your former partner. During this period of change, it is important to continue making mortgage payments while addressing the details of your separation. If one partner is unable or unwilling to make mortgage payments, it is important to contact the lender promptly to explore available options.

Keeping the Property

One option you may consider is agreeing to keep the property within the family following the separation, either to allow your children to continue living in their home or because one of you wishes to remain there. In order to proceed, ownership of the property will need to be transferred to one individual.

One option is to remove one party from the title deedsLegal documents that prove ownership of a property. in order to transfer the property from joint to sole ownership through a transfer of equity. This will allow the lender to remove the designated party from the mortgage, provided the remaining party meets the lender’s affordability criteria.

A transfer of equity can facilitate the replacement of an ex-partner on title deeds and the mortgage. Including another individual on the mortgage can help meet the lender’s affordability requirements.

It is advisable to consult with your lender and solicitor regarding this matter. It is recommended for both original parties to agree on a transfer of equityTransferring ownership of a property from one party to anoth... before involving the lender. If this is not possible, both parties should seek legal advice from solicitors to establish ownership of the property.

Remortgaging

Remortgaging to buy someone out can be challenging for two reasons.

It is possible that the equityThe difference between the value of the property and the amo... might not be sufficient for a higher remortgageRefinancing an existing mortgage with a new mortgage. amount.

Your ex may not meet the affordability criteria on their own.

Typically, lenders will require a specific amount of equity to be held by the individual applying for a mortgage when offering a mortgage product. In cases of remortgage, the percentage of equity held by the applicant is commonly referred to as a deposit.

Separation can present challenges, particularly when it involves managing financial obligations like a shared mortgage. Effective communication with both your ex-partner and your mortgage lender is crucial in finding optimal solutions for all parties involved. Both parties are expected to continue making payments until a new agreement is reached, but there are support options available in the meantime.

In the event of keeping the property within the family, a transfer of equity may be required to remove one party from the title deeds and mortgage. This can streamline ownership and verify that the remaining party meets the lender’s affordability requirements.

When considering buying out your ex-partner through remortgaging, it is crucial to assess the property’s equity and your ex-partner’s ability to meet affordability requirements. Consulting with a solicitor and your lender is recommended to make the most informed decision for your situation.

Navigating a joint mortgage after separation can be challenging, but it is possible to find a solution that works for all parties involved through open communication and careful consideration of all options. It is important to prioritize financial stability for yourself and any dependents.

Removing Your Name from a Mortgage or Deed

When moving out of a home, it is advisable to remove your name from the mortgage and deed of the property. It is important to note that you will need to be removed from the title deeds in order to be removed from the mortgage. Common options for transferring equity include receiving a lump sum buyout from the party keeping the property or selling the property.

To remove your name from a property’s title deed, the required steps include completing an AP1 form and signing the transfer deed (TR1) form . Completed forms should be sent to HM Land Registry. Legal counsel can assist with this procedure. Prior permission from the lender is required if there is an existing mortgage on the property.

Consult with one of our mortgage brokers today to review your available options.