Feb 11, 2021 9:13:04 AM

Divorce and Your Mortgage

Topics: Health and Wellbeing, Buying and Selling Property, Home Loans 0

Divorce or separation is an incredibly stressful time. Made even more so by having to split the family home or buy out your partner. Deciding who gets what often leads to acrimony and upset, making things messy and complicated. Whether you decide to buy out your partner or sell the family home and split the profits, it’s vital you’re absolutely clear on how each of these options could impact you financially.


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Refinancing to buy out your partner

Sometimes it makes sense to keep the family home, by buying out your partner’s share of the mortgage. In Australia, if both you and your partner are listed on the mortgage agreement, you can’t simply take over the mortgage. You will need to refinance the mortgage in your name only.

As with any loan application, refinancing your mortgage after a divorce or separation means proving that you qualify for finance and that you meet lender’s lending requirements, like:

  • Proof of steady employment and an income that is sufficient to repay the loan.
  • A good credit and repayment history.

It’s a good idea to do a credit check before you apply for any new finance, to make sure that you haven’t missed any repayments or had any defaults lodged against any joint accounts you hold with your ex-partner.

And if you are considering refinancing after a divorce or separation, it pays to talk to a mortgage broker – like Mortgage Express – who can help you plan ahead and guide you through the refinancing process.

Selling and dividing the profits

In some instances, both parties choose not to stay in the family home and instead move out. In this case, the easiest approach is to sell the property and then divide the profits once the mortgage and any fees are paid out. This way, both partners have a chance to start afresh using their share of the profits to finance a new home.

If you do choose to go down this route, it’s best to seek legal advice as it can be tricky agreeing on sale price and the split of profits in a divorce or separation situation. But, if you are both listed on the mortgage agreement as the owners of the property, then both parties need to agree before any decisions can be made.

Starting again

Divorces are hard on you, not just emotionally but financially too. Financial hardship in a divorce can lead to missed mortgage repayments which could impact your future borrowing power.

If you are going through a divorce or separation, it’s important you do all you can to reduce the financial impact and any loss, and ensure you are in the best position to start again. Get financial advice from a mortgage broker who can help you plan out your future finances and get you back into your own home again.


Disclaimer:

While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.

Finservice Pty Ltd (Mortgage Express) is authorised as a corporate credit representative (Corporate Credit Representative Number 397386) to engage in credit activities on behalf of BLSSA Pty Ltd (Australian Credit Licence number 391237) ACN 123 600 000 | Full member of MFAA | Member of Australian Financial Complaints Authority (AFCA) | Member of Choice Aggregation Services.