Buying a house together and sharing a mortgage is a common part of marriage. Once divorce occurs, however, what happens to that joint debt, and what rights does each party have? This article answers the common questions regarding how the mortgage is treated as a part of a divorce, including buying out your spouse, making mortgage payments, who keeps the house, and who might be liable to make future mortgage payments.
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My ex paid the mortgage during our marriage, does he/she get to keep the house after divorce?
No, they won’t keep the house just because they paid the mortgage payments. The family home is considered a ‘marital property’ and will become part of a property adjustment order as part of the divorce proceedings.
In most cases, a couple will negotiate between their solicitors the ownership of the house and possible transfer of the mortgage. If the case goes to court, the court has the power to award ownership. Typically, if ownership of the house is awarded to one spouse, there will be other assets in the marriage that are awarded to the other spouse.
Dividing assets in this way may well be more practical than splitting every single asset 50/50. If there are children in the marriage, the court may decide that they are to stay in the family home to maintain a consistent and stable environment. That said, it’s not uncommon for the family home to be sold if the couple agree this to be a cleaner break in order to release any equity in the property and them both go their separate ways.
I want to own the family home after our divorce – can I buy out my ex?
Yes, this is entirely possible, though is also reliant on the ex-spouse agreeing to being bought out and at what price.
To buy them out, you will need to raise the money required to make a fair offer to your ex-spouse. Typically, this means speaking to your mortgage lender to raise a new mortgage to replace any outstanding amount on the entire joint mortgage plus the additional value of your ex-spouse’s share, all in your name.
Your mortgage lender might be amenable to the idea – especially as you have a credit history with them which (hopefully) shows an ability to pay the mortgage, but they will still perform the usual credit checks to assess you as a new customer.
Here is an example in numbers – in this case the couple have agreed to split the house equity 50/50 and one spouse wants to buy out the other:
- Current value of home: £280,000
- Remaining amount on repayment mortgage: £110,000
- Value of ex-spouses share: £85,000 (calculated simply as £140,000 [half house value] minus £55,000 [half of remaining debt])
- Total value of your required mortgage: £195,000 (calculated as the remaining £110,000 plus the £85,000 to be paid to your ex).
Obtaining a £195,000 mortgage with a £280,000 house to use as collateral is not unreasonable if you have sufficient independent income (job of your own), and solid credit history, but it can become difficult if, for example, you are a stay-at-home parent unable to work.
If you are the spouse who is required to pay maintenance to your ex (spouse maintenance and/or child maintenance) in addition to your mortgage you will need to be sure you can afford it.
What should I do if my income alone can’t maintain the mortgage?
This may depend on the financial settlement after divorce. If you are in receipt of maintenance payments from your ex-spouse, this may be sufficient to be granted a mortgage. If you aren’t going to be receiving payments from your spouse, and the mortgage company will not approve your loan, you may be able to ask a family member or friend in a good financial position to act as a guarantor. This means they would be responsible for mortgage payments should you fail to make them.
Ultimately, however, if you cannot make the payments and have no one to act as a guarantor, selling the home may be your only realistic option.
Do you need help with your divorce?
Get in touch now with one of our panel of specialist local family solicitors.
Can I use spousal maintenance to secure a mortgage?
Yes, in the right circumstances. You would need to prove the maintenance was a stable income – that means you would need to have been receiving it for at least a year, or it would need to be court ordered.
Many mortgage lenders will take a qualifying maintenance payment into account, though they may treat maintenance payments as secondary income, which means they will only assess 50-60% of it. Many lenders won’t take child maintenance into account as income.
My spouse wants to remove their name off the mortgage before the divorce proceedings, should I wait?
The easiest way to remove one partner from a mortgage is for the other to buy them out – through refinancing the mortgage as described in a previous section on this page.
If you can do this and your spouse agrees, then make sure you have an agreement drawn up between solicitors. It is possible for a spouse to sell their half of the house to the other before divorcing, only for the house to still form part of the marital assets and be divided as part of the financial settlement.
Can I let my ex remain on the mortgage and rent from him/her?
Yes. If you can reach an amicable arrangement with your spouse where this situation is agreeable to you both, there is no legal reason why you cannot leave the mortgage in place and the party in situ pay rent to the other for their share of the property.
It may be possible to claim housing benefit to help pay for the rent. For this to happen, there must be a formal rental agreement in place at market value. Individual councils can still reject any housing benefit application and it is worth speaking to them in advance if you need to do this.
The emotions involved in renting in this way, and the potential for future disagreements mean it is not a recommended solution by many, but there is no legal issue.
Can my spouse pay the mortgage after we’re divorced even if they have moved out?
It’s not uncommon, especially where children are involved, for one spouse to remain in the house while their ex leaves but continues to pay some or all of the mortgage.
In this situation, it may be that there is agreement between the spouses that the house will be sold within a defined period (e.g. a year, or until the children reach a certain age) or that the spouse who pays a greater contribution to the mortgage is compensated by them gaining a larger share of other assets (e.g. pensions or savings).
My spouse refuses to pay the mortgage until the divorce proceedings are finalised – will the mortgage lender repossess the house?
The divorce is not grounds for any sort of exemption regarding paying the mortgage. Your spouse has the same responsibility to pay the mortgage through the divorce as any other time and the consequences of not doing so – ultimately home repossession – remain the same.
My spouse is defaulting on our mortgage and threatening bankruptcy during divorce – what can I do?
The mortgage lender has a right to follow the appropriate legal process should the mortgage not be paid. If your spouse fails to make payments, charges will be incurred, their credit record will be negatively affected and eventually the house will need to be sold to repay the debt.
One option is for you to become a creditor, lending your spouse the money and ensuring the mortgage payments are kept up to date. This is undesirable, you may never see the money returned to you.
Another is to accept the loss of the house and discuss selling it to disentangle yourself from the situation. This may be similarly undesirable but is often preferable to a repossession.
It is important you talk to your mortgage lender and inform them of the situation, seeking their advice as they may be able to help.
Our article on Bankruptcy and Divorce offers further advice.
Our family home has negative equity and my ex is forcing a sale – will I end up in debt?
It’s not possible to sell a house for less than is owed on the mortgage unless there are other funds in place to make up the shortfall. If needed, the mortgage lender will block a sale of a house with negative equity, instead waiting for the mortgage to be paid and positive equity restored.
If your name is on the title deed, your ex will only be able to sell their share in the property without your permission – not the ownership itself. While this can cause problems, it will not force you out of your home.
Can my name be taken off the mortgage without my permission?
No, the lender will not allow your name to be removed from the mortgage without your signature. Even if you did agree, your spouse would have to be able to prove their ability to cover the entire mortgage without your help before the lender would consider such a move.
Can I force my ex to release the mortgage to me?
No, you can apply to the court to force a sale on the house as part of the divorce proceedings, but without legal intervention you are no more entitled to remove your ex from the mortgage as they are to do the same to you.
Can I use the opportunity divorce offers to increase the mortgage and improve the home?
Possibly. If you apply to refinance the loan or obtain a new mortgage in order to buy out your ex-spouse, then you can apply to increase the mortgage for home improvements. The mortgage company will assess your application and approve or decline it.
How do I sell the house to pay off the mortgage and release my equity if he/she doesn’t want to?
Just as your home cannot be sold under your feet, so too are you unable to sell a jointly-owned home without the other’s permission. The best thing to do is reach an agreement – perhaps offer a fair price to sell your share of the home to your ex.
If they are completely uncooperative however, you can apply for a court order which will, if successful, provide a reasonable time frame for your house to be sold.
If your ex-spouse is living in the home with the children, this agreed time frame may encompass years to provide a stable living environment for the children.
You can always sell your share of the home, as is your right. You may find it difficult to find a buyer and you could need to accept less than market value to do so.
If you need to force the sale of your joint home, seek legal advice.
Do you need help with your divorce?
Get in touch now with one of our panel of specialist local family solicitors.
The information on this website is to be considered a guide and is therefore not legal advice. You use this information with the understanding that Wiselaw does not accept liability for any direct or indirect losses as a result of anyone relying on or acting upon the information on this website. Whilst we endeavour to provide accurate information, Wiselaw does not accept liability for any errors or omissions on this website.
