No, THEY left ME, I don’t have to pay the mortgage repayments! It’s their fault!… Isn’t it?
In the case of a divorce, you might feel like you just want to curl up into a ball and disappear. You might want your partner to just vanish so you never have to deal with them again.
Unfortunately, it isn’t that easy.
You have a string of responsibilities that you can not ignore until the divorce is finished and resolved. You cannot ignore divorce payments and split mortgage payments. You will come into significant credit and legal trouble if you ignore your separation and mortgage rights.
But what are those rights? Who gets what in a divorce? What am I entitled to in a separation in Australia, and do I have to pay the mortgage if we split up?
Do not worry, in this article we will discuss the ins and outs of what you should be aware of regarding your mortgage in a separation.
How Are Assets Split Between You And Your Ex In A Divorce?
No matter how generic and normal you think your divorce might be, there is no normal and generic way to approach it. Each divorce is different and each divorce requires a different approach. This is why it is so important to hire a lawyer so you can keep as many of your assets as possible.
However, as a general rule of thumb so you can get somewhat of an idea, assets are split between parties based on some of these factors:
- If there is a legal agreement already made such as a prenuptial agreement.
- The level of contribution made by each party.
- The future earnings/income potential of each party.
- The contributions each party has made to your property such as mortgage, renovations etc.
- Any contributions that relate to care or are non-financial (raising kids etc).
- If the children in the house, if any, are dependent.
- How long the relationship has lasted.
What Are Your Options For Splitting A Mortgage In A Divorce
Undoubtedly, the easiest option for when you split a mortgage in a divorce is to continue paying the mortgage equally if appropriate until it is paid off. If you pay equally and you do keep paying, there will be no problem from the Bank.
Unfortunately, this is more uncommon than not. Partners often have; dissimilar incomes, dissimilar costs (kids etc), and dissimilar interests/wants to keep paying off the mortgage, particularly if they no longer live in the home.
If this is the case, there are 3 options that you can pursue:
- Pay out your ex partner’s share in your property, so it can be completely owned by you.
- Sell your share of your property to your ex partner, so you no longer have to worry about mortgage repayments.
- You can both sell the property, and take the profits.
Can You Refinance Your House In A Divorce?
Yes you can refinance your house during a divorce, and it is needed in deciding who gets the house in a divorce. More or less, refinancing your house is done when you, or your partner, decide to buy out one or the other’s share in the house.
For more information on refinancing your home and how to settle it with your partner, you should contact your bank and get legal advice from a family law professional.
How To Buy Out Your Partner’s Share In The Property
Does it matter who pays the mortgage in a divorce? No, it doesn’t. All that matters is someone actually pays it off. This means that you can buy out your ex partners share of the property, and pay off their share of the mortgage. This means that:
- You will need to qualify the repayments all by yourself.
- You will need to refinance the house with your bank.
- You may have to pay Lenders Mortgage Insurance (LMI) if the loan you are now taking is more than 80% the total value of the property.
- You will have the complete title of the house after buying your partner share in the property.
What You Must Have To Qualify Buying Someone Out Of A Joint Mortgage
- You must have a decent repayment history and cannot be in bad standing with your current repayments.
- You have to prove to your bank that you have the income to be able to pay for the increased mortgage repayments. You do not have to show any savings.
- Your ex partner has to agree to transferring and sign a transfer form to you.
- You must have the finance to buy someone out of a joint mortgage.
How To Transfer Your Mortgage To Your Ex Partner
Yes, you are able to let your ex partner buy-out your share of the mortgage. All the bank cares about at the end of the day is if someone actually pays. If you do decide to sell-out to your ex partner, it will mean:
- You will no longer have to pay your mortgage payments.
- Your partner will have to pick up all of the repayments, and will have to be able.
- You will have to refinance the house.
- You will not be entitled to the property title anymore.
- You may be eligible for capital gains tax rollover relief, because your ex partner has taken over the asset, and you haven’t sold it.
How Is Equity Divided During A Divorce
Equity is divided based on your negotiations with your ex partners and your lawyers, or what the court decides on your property settlement. What your split is depends on your circumstances, and how well you can argue those circumstances in negotiations and in court.
That is why you need a top quality lawyer to represent you. So you can get the most you can in a divorce.
The usual conditions that change the division of equity and splitting home loans are:
- How long the relationship lasted.
- If you have children and if they are still dependent or not.
- The level of financial contributions each party has made during the relationship.
- Non-financial contributions, such as level of parenting involvement that has restricted one party from earning an income.
If You’re Having Difficulty Repaying The Mortgage Repayments
The first thing to do is simply talk to your bank. Believe it or not, your bank is actually a lot more understanding than you might think. They would prefer you pay off the regular loan than to rush a fire sale of your house. The bank can implement a mortgage freeze and other short term solutions to help you.
The other thing to do is for you and your ex partner to sell the property and take the profits. To help discuss your best options, seek legal advice.
Where To Find Affordable Legal Help
Don’t let Google search stand in as your lawyer. The information out there is incomprehensive and untrustworthy.
So how do you find a lawyer you can trust and rely on? With so many law firms in Perth, it can be hard to find one who will understand and listen to your situation.
Savannah Legal offers a free 1 hour consultation and we take the time to understand your situation, concerns and needs, before providing you with a legal plan outlining your options. Our goal is to give you affordable legal advice while lifting a burden off your shoulders. Book your free consultation today.
If you still have questions, such as; “how much does a restraining order cost in Australia” and “can you get a restraining order for harassment”, we can help.