What Happens if You Have a Joint Mortgage and Split Up?

When a married couple buys a home, it’s with many dreams and hopes for the future.

Sadly, just as marriages are common, divorces are becoming very common. And while no one wants to split up, sometimes it’s inevitable. 

In such cases, if you and your ex-spouse have a joint mortgage, you must decide what to do with it after you’ve separated.

In this article, we’ll examine what happens if you have a joint mortgage and split up, what your options are, and what steps you can take to ensure a smooth transition.

Let’s get started.

What Happens If You Have a Joint Mortgage And Split Up?

Since a joint mortgage is taken in the name of both spouses, it remains so even after divorce. This means that from the lender’s perspective, you are still equally responsible for repaying the loan.

This means that missed payments will affect both your credit scores and might result in repossession of the property in question. That’s why continuing the payments is vital until you can both reach an agreement.

When splitting up with a joint mortgage, reviewing the mortgage agreement and carefully understanding your rights and duties is essential. 

You can also look at the property’s Land Registry records to see if there are any restrictions on the holding.

How To Deal With A Joint Mortgage When Splitting Up

Honestly, there are no direct answers to this question; it all depends on your and your spouse’s decision and how amicable your divorce is. 

In the following, we’ll discuss some options that you might be able to use.

1. Sell The Property

This is the simplest option but can impact both parties involved. However, given the circumstances, it might be the only viable option.

When selling the property, you’ll need to use the proceeds to pay off the mortgage. Any money remaining after settling the mortgage is considered a matrimonial asset and must be divided between both parties per any settlement agreement. 

The exact amount each of you will get is negotiable between you two, and you might need to take the help of a divorce solicitor to reach a fair resolution. If this isn’t possible, you might want to move to court to settle the matter.

However, the above situation is when you’re in positive equity, i.e., the property’s price is enough to pay off the entire loan. 

In case of negative equity, which means the mortgage value is higher than the property’s selling price, both parties need to decide on how to share the remaining debt or raise enough funds to pay it back.

2. Transfer Of Equity

In this option, one spouse keeps the entire property and buys out the other’s share, removing one of the parties from the mortgage agreement.

In this case, the person buying the property must apply for a new mortgage or get the other partner removed from the agreement. 

However, the lender isn’t obligated to agree and might levy additional fees or charge a higher rate for the new mortgage. 

This is because, from the lender’s perspective, switching to a solo mortgage from a joint one is riskier, as they must rely on a single person to repay the loan. 

This means the lender will put you through a strict affordability assessment before agreeing to the loan.

That’s why, before taking this route, we recommend you consult a mortgage broker or financial expert regarding the best option. These professionals can guide you regarding the affordability of the new loan, what effect this might have on your finances, etc. 

In case of any dispute between you and your ex regarding the equity or property value, professionals can help you reach a resolution.

Remember that this approach might involve additional fees, such as solicitor fees, mortgage exit fees, or mortgage arrangement fees.

3. Postpone The Sale

It’s important to understand that getting a divorce doesn’t mean you’ll need to settle the mortgage or sell the property immediately. 

Some couples split up but keep the mortgage and make joint payments even after splitting up. This is primarily when the couple has children and don’t want the divorce to affect their lives too much.

In this situation, your solicitor can get a Mesher order, which ensures that you won’t be able to sell your home until a certain trigger event occurs, such as your child turning 18 or the person currently living in the home remarrying.

In a Mesher order, both parties remain responsible for the mortgage unless otherwise agreed upon. 

What Happens When An Agreement Can’t Be Reached

In case you can’t reach an agreement, you can try negotiations through a solicitor. 

No matter what, you will have to keep your lender in the know, because they are the third party involved in the mortgage agreement, and their say matters. 

If out-of-court negotiations do not work, you can always move to court and let them decide things for you.

The court will usually look at all your finances as a whole and try to determine a fair division of all your assets, including the family home. If you have young children, their welfare will remain the first consideration of the judge.

Keep in mind that going to court is a time-consuming and expensive option, and you are not guaranteed to get the outcome you desire.

Frequently Asked Questions?

1. Can having a joint mortgage stop me from getting divorced?

No, having a joint mortgage is no hindrance to getting a divorce. You can always continue paying the mortgage together even after you’ve split up.

2. Can my name be on two mortgages?

Yes, it is possible, but you’ll need to prove your affordability to the lenders before you can get them sanctioned. Unless you can prove that you can afford both loans, you might not be able to get them.