How does divorce affect my mortgage?
If you divorce and both your names are on the mortgage of your home, you and your ex-spouse must both continue making mortgage repayments until you reach a financial settlement. Missing payments will harm your credit score (making it harder for you to get mortgages in the future) and at worst could lead to repossession of your home. Forcing your ex-spouse to pay your share is also a big risk, as this could be used against you in any future financial dispute.
Deciding how to share the marriage assets can be one of the trickiest parts of a divorce – and your home is probably your biggest asset. Here are the issues you need to think about and how to address them.
- Who gets the property in a divorce?
- What happens to a joint mortgage?
- What if we're in negative equity?
- What if you're not on the property's title deeds?
In theory, marriage assets should be divided equally between both divorcing spouses. The reality is nearly always more complex than that, especially if children are involved. To share a property equally means selling it, and there are many reasons why you may not want to do this.
Here are the options for what to do with your home following a divorce.
How a home is shared out following a divorce
- Sell – this is the simplest option. It allows you to pay off the mortgage and release your money as well as any equity, which you could use to buy somewhere else separately. However, if your children want to keep living there then it may not be your preferred choice.
- One owner buys the other out – if one of you wants to stay in the home, you could come to an arrangement where one of you buys the other out. You’ll need to get the property valued to make sure the person leaving gets back the money they put in plus their share of any equity.
- One person stays but you both own it – both of you own the property even though only one of you lives in it. This is more common if you have children, and there might be a ‘Mesher’ order set up through the courts to say you can’t sell it until a certain time (e.g. when the children turn 18).
- Make it part of the settlement – you can arrange for one of you to keep the house while the other receives other assets from the marriage to the equivalent value.
- Let the court decide – if you can’t come to an agreement, the court can decide for you. If there are children, the judge will usually seek the option that causes little disruption for them as possible. To do this, you’ll have to apply for a financial order, so it’s a good idea to get legal advice to guide you through the process.
As soon as you know you’re getting divorced, speak to your mortgage provider. Providers can be sympathetic when you’re experiencing personal difficulties and may be able to offer some form of repayment relief or leeway.
If you have a joint mortgage, talk to your solicitor about how to proceed. If you are the one moving out, you may be able to take your name off the mortgage to make it easier for you to get another one. However, you will need reassurance that this won’t result in your losing out on your share of the property. Conversely, if you are the one staying in the home, and your ex-spouse wants to take their name off the mortgage, you’ll need to make sure you can continue to pay the mortgage on your own. A financial adviser can help here.
Being in negative equity means that your home has fallen in value since you bought it, to the extent that selling it would not raise enough money to pay off your mortgage. Negative equity tends to affect people in the months and years following a property price crash. If this happens to you around the time of your divorce, it may be necessary to find an alternative to selling (such as one ex-spouse buying the other one out – which should be easier if property prices are low). If you really do have to sell at a loss, then you will have to work out how to share the debt as part of the financial settlement.
If you bought the property since you married, the property will usually be considered a joint asset. That means you should have some claim to the property when you separate, even if your name isn’t on the deeds. You could register your matrimonial rights to the property through Land Registry, which can legally prevent your ex-spouse from selling it without your permission.
However, if your ex-spouse bought the home before you married, it’s unlikely you will have any claim over the property.
Either way, seek advice from a solicitor if your name isn’t on the title deeds but you believe you have a claim to a share of the home.
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