Mortgages and property transfers

Mortgages and transfers of property on divorce/dissolution

mortgage-keysWill the family home have to be sold?

Sometimes it is necessary for the family home to be sold, but sometimes it may be possible for it to be transferred to one of you, subject to a mortgage if there is one. Sometimes a re-mortgage may be appropriate or a further advance.

Dealing with a joint mortgage

If the home is jointly owned, then it will be a joint mortgage. This has two main implications:

  1. If one of you wishes to have a mortgage on a new home, then you will have to disclose the fact that you are also responsible for the mortgage on the former family home. Whether you will be able to obtain a second mortgage will depend on several factors such as:
    • The amount of the old mortgage.
    • The amount of your income.
    • The amount of the proposed new mortgage.
    • The amount of equity (capital) to be put into the purchase.
    • Whether anyone with sufficient capital/income resources is prepared to guarantee the mortgage.

    As a rough guide, lenders will advance between three and four times your total income. However, they will take into account other commitments such as an existing mortgage liability and other debt.

  2. If one of you wishes to remain in the former family home, then you have to have enough income to meet the repayments. If you are in receipt of benefit, then the mortgagee is not likely to agree to the release of the other person from the mortgage.

Other things to consider

The rules relating to mortgages and transfers of homes are complicated. Not all lenders are the same. Also, if there is a lot of equity in the home (that means the difference between the value of the home and the mortgage), the lender may be more flexible than if there is a little or no equity.

It will often be necessary for you both to obtain independent financial advice as to your options in relation to the former family home and any new property you may wish to buy.

Remember also that lenders will not release title deeds to individuals. They will insist on sending them to solicitors or conveyancers for any conveyancing work to be done.

This information is designed to be neutral and will be given to everyone to whom it is relevant. It is not designed to replace detailed legal advice tailored to your particular circumstances. It is intended to help you identify some options which may be open to you. It is not for reproduction and may not be used in any other context.

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