Life doesn’t always go as planned, and when joint finances are involved a relationship breakdown has more implications than just the emotional aspect. Today, we investigate how to get a mortgage after divorce.

The practicalities of a divorce or separation is something many people now have to face, with 42% of all marriages ending in divorce. In fact, legal firms typically receive a surge in divorce related enquiries around this time of year, with the first working Monday in January dubbed ‘Divorce Day’. It is when the stresses and strains of the festive period become unnavigable, and Christmas has been endured for the sake of the kids.

But how does this affect your position in the mortgage market?

Let’s Talk Affordability

The Mortgage Market Review, or MMR, was brought into force in 2014. It imposed stricter affordability criteria, meaning lenders had to look at applicants’ incomes and outgoings to ensure they could afford mortgage repayments not just now, but also in the event of any future interest rate rises. Divorcees have found themselves added to a group termed ‘mortgage misfits’, those post-MMR finding it hard to obtain a mortgage because their circumstances do not fit a one-size fits all approach.

Divorcees are impacted not just because of a reduced household income, but also because only a few mortgage lenders will accept child maintenance payments when making affordability calculations. Considering 2.8 million UK households consist of lone parents, it means mortgage applications may be judged solely on an often part-time employment income.

When applying for a mortgage after a divorce it is also worth approaching a lender who uses what is called manual underwriting, a real person assessing your individual circumstances rather than a computer based decision which may dismiss anything deemed ‘unusual’.

One lender who is able to use this common sense approach to mortgage applicants and accepts 100% of child maintenance, where supported by a CSA or Court Order with 5 years left to run, is Ipswich Building Society.

Existing Mortgage Worries

During a relationship breakdown you may experience financial pressures, meaning you could find it hard to afford your usual mortgage repayment. You should take time to compile a clear picture of your outgoings, and contact your mortgage lender to discuss your situation and the options that may be available to you. Remember, missing any scheduled mortgage payments or going into arrears, even temporarily, can affect your credit and ability to get a mortgage in the future.

If you are divorcing a partner and you hold an existing joint mortgage you’ll need to check the terms of your mortgage agreement and be aware of the obligations of each named party. When going through the courts the priority will always be to ensure that any children involved have a secure home, and you may not be in the position of one person being able to buy their partner out of their share of the property and taking on the whole mortgage.

Instead there are several orders the courts may make, with common options including transfer of ownership, with lesser share of possessions; retaining joint ownership but giving one party the right to stay; transferring the home to one party but with a charge secured on the property (ensuring the other party receives a set percentage when the home is sold); or selling the home and splitting the proceeds between both parties in whatever proportions are deemed fair.

Of course many of these outcomes will require some amendments to your mortgage contract, so it is always recommended you speak to your lender as soon as possible. They’ll work with you to ensure the best possible outcome, and be able to explain your obligations.