When a couple decides it’s best for them to separate, it can be an emotional and confusing time. What can make this situation even more tricky to deal with is if the couple have a joint mortgage. Adding in financial matters to an already difficult situation can seem daunting to say the least.
We’ve broken down everything you need to know about what happens to a joint mortgage when a couple separates in this guide.
What is a Joint Mortgage?
Before we get into what happens to a joint mortgage when a couple separates, we need to establish what a joint mortgage actually is.
Put simply, a joint mortgage is a mortgage that you take out with other people, whether they be a partner, friend, or family member. In a joint mortgage, all owners share a joint responsibility for making the mortgage repayments. It’s a good idea to only ever take out a joint mortgage with someone who you know will be able to keep up the repayments, to avoid your credit score being damaged.
Am I Able to Stop Paying My Joint Mortgage After a Separation?
No, you should not stop paying your joint mortgage after separating from your partner. While it may be a highly emotive and stressful period in your life, it is essential that you keep on top of your scheduled joint mortgage repayments, so as not to negatively impact your credit score and your ex-partner’s.
While your mortgage may be at the bottom of your list of priorities during a separation, it’s important to continue with your regular payments. Unfortunately, the numbers don’t take into account your personal circumstances when it comes to your credit rating. A low credit rating can make it more difficult to take out any kind of loan, not just mortgages, in the future.
What Can I Do When My Partner and I Have Separated But We Have a Joint Mortgage?
When you and your ex-partner signed up for a joint mortgage, you each took on an equal share of the ownership of the property. This means that even in the case of a separation, both you and your ex-partner have the legal right to remain living in the property should you choose to do so. It also means that you are both liable to pay the mortgage.
Thankfully, you do have some options when it comes to your joint mortgage with an ex-partner. Here, we’ll go through some of your options:
One Person Can Buy Their Ex-Partner out of The Mortgage
If one person is keen to remain living in the property and has sufficient funds to pay the mortgage repayments alone, they can buy their ex-partner out of the joint mortgage. In cases like these, it’s important to contact your lender to make sure they are happy for this to happen, and for the mortgage to be moved into just one person’s name. Before this can happen, checks similar to those before you took out your mortgage will likely be made, including making sure the person can afford to keep up the repayments by themselves.
The logistics of how one person buys the other out of the mortgage are largely individual, and depend on various factors, including whether you use a solicitor or not. If the former couple decide to split things evenly, they would work out how much of the mortgage has already been paid, and half this amount. This would then be added to the deposit amount paid by the other person initially, and paid to the individual.
To illustrate, if a former couple wanted to have one buy the other out of their joint mortgage, they would follow the steps outlined above. If they have paid £50,000 towards their mortgage in a 50/50 split and each paid a deposit of £10,000, one person would have to pay the other £35,000 (£25,000 + £10,000) to buy them out of the joint mortgage.
One Person Takes On The Mortgage with a Guarantor
If one person wants to remain in the property and buy the other out of the joint mortgage, but they cannot afford to do so alone, they can use a guarantor. In this instance, the guarantor (usually a friend or family member) will sign a declaration agreeing to pay the mortgage repayments should the individual be unable to do so. The guarantor will have to pass the affordability checks set out by your lender.
Pay Off The Mortgage and Move On
If you and your partner separate when you are close to paying off your joint mortgage, an option is to continue making your scheduled repayments to pay off the remainder of the mortgage, then split the profits. This is likely only a viable option if the former couple are on good terms.
Sell Your Property and Split The Proceeds
Another option for how to deal with a joint mortgage when a couple separates is to sell the property. Once the property has been sold, the ex-couple will need to pay off the remainder of the mortgage, and split any profits – or debt relating to your equity – between you equally.
