Getting divorced is an emotionally and financially stressful period for both partners. The pressure of getting divorced can become even more painful when deciding what to do with your home’s mortgage. This process may lead to mortgage modification after divorce. If you have mortgage divorce questions, read on.
This article is useful for homeowners that are separating from their partners. In this blog, we will discuss communicating with your ex-spouse, the mortgage options available to you after divorce, and talking to your lender about modifying your mortgage.
Communicate with your ex-spouse
The first step of dealing with your mortgage after divorce is communicating with your ex-partner. Important decisions need to be considered that involve both parties agreeing on what to do with the property. Avoiding communication with your partner can lead to disagreements, delays, and potential legal complications.
What mortgage options are available after divorce?
Once communication is established, you can consider the options available to deal with your mortgage. If you are getting divorced and you have both names on the mortgage, there are three main things you can do.
1. Sell your home and split your money
Many couples choose to sell their home and split the money as it can be difficult for one partner to pay off the mortgage themselves. Selling the home and splitting the money is a fair way of dissolving the mortgage and moving on separately. Partners that choose this option should also consider the additional costs such as real estate agent fees and capital gains taxes.
2. One of you buys the other out (transfer of equity).
One partner can take sole ownership of the property and buy the other partner out of their stake. This process is known as a transfer of equity. The person buying the other person’s stake may need to refinance or secure a new loan in their own name. Transfer of equity may come with additional fees such as stamp duty. If you are looking for mortgage modification after divorce, it is worth consulting with professionals such as lawyers or mortgage advisors.
3. Continue paying the mortgage jointly
Some partners with children may choose to continue paying the mortgage together so their children can stay in the same home. This option requires ongoing communication and cooperation. It is important for both parents to plan and establish responsibilities and how they will handle issues such as one party failing to fulfil their obligations.
Talk to your lender about modifying your mortgage
Before making any decisions, it is important to comprehend the conditions of your mortgage and any penalties that may apply. In some circumstances, it may be possible to bargain for a mortgage modification to reduce your monthly mortgage payments after your divorce.
Talk to your lender about the situation. Some lenders may be understanding and provide you with a payment holiday (a break from repaying your mortgage, however, you will still be responsible for the interest).
Dealing with your mortgage after divorce requires communication between both parties regardless of what option you choose. Selling your home and splitting the money is an easy and fair way to deal with your joint mortgage. One partner buying the other out is more complicated but is a viable option for people that have enough income to take on the mortgage alone. Continuing to pay your mortgage jointly can be beneficial for couples that have children. Talking to your lender can be beneficial as your lender may be more lenient and sympathetic about your situation.
Looking for a new mortgage?
If you are dealing with your mortgage after divorce, One Click Life can help you find a lender that meets your needs, whilst saving you more money. We are a mortgage broker that has a team of expert professionals to help you choose a mortgage that suits you. One Click Life can also look after your Health Insurance, Will, and Taxes so you can focus on the things that matter to you.