Is it a good idea to re-mortgage before a divorce?

Is it a good idea to re-mortgage before a divorce?

- in Law

Do you know how to handle the key financials at a tricky time?

Divorce is a difficult time, emotionally and financially. If you’re about to get divorced then you may be struggling to work out what life looks like without your existing partner in your life. Responsibilities that are currently shared will need to be split – and that includes a joint mortgage. But is it really a good idea to re-mortgage before a divorce?

No, it’s not a good idea to re-mortgage before a divorce

When it comes to the mortgage, the ideal situation is often to sell the property and pay off the mortgage before the divorce takes place. This will mean that you no longer have a shared legal responsibility with your now ex partner and that you’re not connected financially. You may also both have a share of any profits from the property to enable you to start a new life. So, if you’re about to divorce and you have a joint mortgage then it might be a better step to look into whether a sale is possible.

Yes, it’s a good idea to re-mortgage before a divorce

The reality for many people is that a quick sale at exactly the right time and exactly the right price simply isn’t going to be possible. House prices have been stagnant for some time and there isn’t a lot of movement in many property markets right now. This could considerably hold up the process of selling a property and make the ideal of clearing the debt (find more info here) and moving on impossible to achieve. If, in that situation, your mortgage is about to come to the end of a fixed term – or you have a seen a better mortgage deal that means you’re paying less for the mortgage debt – it could actually be a good idea to re-mortgage before a divorce.

It will depend on your circumstances

The most realistic answer to the question of whether pre-divorce is the right time to remortgage, according to online broker Solution Loans, is that it really depends on your individual circumstances. You’ll need to take into account a number of external factors, such as local movement in the property market, any likely interest rate rises and whether you will need to retain the property for one partner and any children to live in. You’ll also need to bear in mind the following key points about divorce and mortgages:

  • Even if you’re the sole owner of a property you may still not have a right to sell if you have shared it with your spouse, so consult a lawyer before you take any action.
  • You don’t have to sell to a stranger. If your partner wants to buy you out then the issue of a remortgage will become solely theirs.
  • Make sure you put any financial agreement in the right form so that it is binding and will split your finances – including the property and related monies – for good.
  • Until everything is settled, you and your partner will need to work together. Whether that’s on re-mortgaging the property, selling it or one partner buying the other out.

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