Mortgages and Divorce

What happens to the family home is always a major issue for consideration in the financial settlement in a divorce. Will it be sold? Will the ownership of the property be transferred in to the sole name of one of the couple?

There are various different options available which your solicitor can advise you on.

Whether one of the couple remains living in the property post-divorce will depend on affordability and whether it is appropriate as part of the financial settlement in the divorce

In the majority of cases, if someone wishes to find out if they can afford to take on the family home or (if the family home is to be sold) run a new purchased property post-divorce, they will need to find out about their mortgage position.

I have had the opportunity of interviewing experienced mortgage expert and director at Crystal Clear Financial Services, Mike Brown, to ask him some important questions when approaching getting a mortgage.

Here is what he had to say….

What is a mortgage capacity assessment and what’s involved?

A ‘mortgage capacity assessment’ is an assessment of income, outgoings and liabilities to provide an indication of what mortgage amount could be achieved, both in terms of a mortgage amount and a monthly payment.  The best place for any client to start with this is with a credit report as all details of commitments are on there and accurate, and then details of any income as an advisor conducting the mortgage capacity assessment can then determine which lenders will or will not use that source of income.  If all the information is available, then on a straight forward case, an indicative figure could usually be provided in a couple of days, and for more complex cases, 3 to 4 days.

What info do you need from the divorce client before/at the meeting?

Details of all forms of income, and future income, particularly when there are maintenance payments involved.  An addition to this is to know how much is spousal maintenance and how much is child maintenance and the end dates for both elements.  The other information needed would be a copy of the credit report which will show all liabilities in the client’s name, so a reasonably accurate assessment can be conducted.  Experian and Equifax are the 2 most common ones, but there are some free ones, like Noddle

What should the divorce client be considering?

The client should be considering whether their objective is feasible, so the main one that comes up is to stay in the marital home, so if that is the case, is the loan amount achievable and is the monthly payment manageable?  We would help with that assessment to ensure clients are not overstretching themselves.  Also, how long the client thinks they will remain in that property.  The other thing to consider is that it would be great to have the mortgage on a full repayment basis, but again, that’s sometimes not possible at this time, but stability at home for children is more important, so there could be options for Interest Only, but it is worth considering at this stage how long that lasts and what the exit plan is and whether that plan is feasible too.

What top tip would you give to someone going through divorce who needs to consider their options re housing in the divorce settlement?

The top tip is to get started on the planning as soon as possible.  That almost sounds too obvious, but sometimes re-positioning finances and in some cases just getting your head around the finances can be quite a challenge, so the longer you leave yourself to do this, the better!

 

To find out more about how Mike Brown could help you with any of your mortgage queries, get in touch with him here.

 

I work with people at all different stages of the separation and divorce process. To find out more about how I could help you, see my Services page and get in touch with me here.

 

If you have found the tips in this blog useful then you will find lots more in my ebook “Tips for Coping with Divorce” which you can download here: free ebook.

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