Guide to Selling a House During a Divorce

For most married couples, the house is the largest asset that
they own. Once divorced, they will need to separate this between them, which is
often quite an emotional time for both parties to come to a decision.

There are a number of different financial considerations to
make when selling a home during a divorce, from whether to sell the home
together, buy out your spouse, keep the house long enough for your youngest to
finish school, or hold on to the house for other reasons, such as waiting for a
more desirable time of year to sell. Depending on the circumstances, this is a personal
decision that varies from person to person. But don’t fret, in this guide, we
will help you to understand your options for dividing ownership of a property
in a divorce and how to get a new mortgage once your marriage has ended.

How is a house divided in a divorce?

When your relationship breaks down, it can be a complicated affair – particularly when a house is involved. This can be discussed between both parties until they come to an agreement, however if this agreement doesn’t come easily, you should think about seeking professional advice instead.

Whichever path you take, your property will need to be
valued to create a settlement price. Again, if you are unable to agree on a
settlement figure, the court will order a joint report from a local estate
agent and surveyor.

Three of the most popular options for dividing, or
transferring, ownership of your property includes:

1. Both selling and moving out

This can be frustrating, but more often than not, this is
the best option for both parties, particularly when neither husband or wife can
come to a decision.

2. Selling later

For some couples, they might decide that selling a house
after divorce is a good idea. Usually, couples wait until a certain event to occur
before selling their home, such as when their youngest child turns 18 years old.
When this happens, commonly one person stays in the home and the other moves
out.

3. Buying your partner out

Whether your finances allow for it, you could choose to buy the other person’s share in the property so that ownership transfers to just one person.

What
happens to a joint mortgage when you divorce?

Once you have divorced your partner, both of you will be
financially tied if you have any joint finances, such as a mortgage for
instance. Therefore, any failure to make mortgage repayments, whether you’re
still living inside the property, or not, could damage both of your credit
scores. This can be highly detrimental if you want to purchase a house with a
mortgage in the future.

If one party refuses to pay the mortgage, for whatever reason, it could result in the property being repossessed. It is for this reason that it is important to let your mortgage lender know about your situation straight away.

Taking
on your partner’s share of the mortgage

After a divorce, couples may be thinking “how to sell a
house in joint names” and “how to get out of a joint mortgage?” It isn’t
uncommon to decide you want to transfer your joint mortgage into just one
person’s name, which means only one person is liable for mortgage repayments.

This can be helpful, as:

• it breaks all financial ties with your
  ex-partner
• it stops the risk of mortgage repayments being
  compromised
• it allows the person taken off the mortgage to
  apply for a new one on a new property

But, if you decide to go down this route, you must make sure you are able to pay the mortgage on time, otherwise you may face repossession. Your mortgage lender will be able to calculate whether you’ll still be able to afford the mortgage repayments for you, to work out whether it’s feasible. If there is no way you are able to pay the monthly payments, your best bet is to sell up and move to a cheaper and smaller home. 

If your mortgage lender doesn’t think you will be able to afford the payments, but you’re confident you will, another option is to apply for a guarantor mortgage. Essentially, this is a mortgage where a parent or family member takes on some of the risk by offering their home or savings as security on the loan. However, bear in mind that this is a big risk and not a guaranteed alternative, as some family members may not be willing to be your guarantor. They are liable for any missed mortgage payments you make, and if they can’t find the money to pay it either, there is a chance they could lose their home too.

Alternatively, you may want to consider selling your house fast using a
quick property sales company, such as Sell House Fast. They buy your home within 4 weeks, offering up to 90% of your property’s value, to ensure you get the quick sale you need during the divorce process, which you can split between you and your partner and put towards a new home.

Buying
a house and getting a mortgage after divorce

Once you have sold your martial home and want to move
elsewhere and take out a mortgage, your ability to do so will depend on your
financial situation.

When speaking to mortgage lenders, they will take a variety of factors into account, including how much deposit you have, your income, credit score, debt, average monthly expenditure and any other personal circumstances.

It is worth noting that some lenders will consider granting 100% mortgages to those who have suffered a relationship breakdown. However, an independent mortgage broker will be able to advise you how much you could be eligible to borrow to successfully move home.

Before deciding on a budget for your new home, remember that the costs of buying a house go far beyond what you’ll pay for your mortgage. Make sure you factor in house survey costs, conveyancing fees and stamp duty, as well as additional costs like removals, home contents insurance and household bills.

Get impartial
advice

Let’s be honest, mortgages can be confusing at the best of times, never mind when you’re going through a tough divorce, it can feel overwhelming. Therefore, it is advisable to get in touch with a mortgage advisor to give you advice on your options.

Feature image credit: Aquarius Studio / Shutterstock