Get the support you need during an emotional and challenging time.
understand your finance options
It is imperative that you understand your current financial situation before any negotiations begin. Unless you have a firm understanding of what you own and owe, you will start off on the back foot.
This is where an experienced mortgage broker can really add value.
mortgages and property - what happens after a divorce
divorce and mortgage obligations
After a divorce, mortgage obligations remain unchanged, irrespective of relationship status. If both partners are listed as borrowers, each is accountable for monthly repayments. Failing to meet these obligations can adversely affect credit ratings and may lead to penalties such as increased interest rates or potential foreclosure proceedings by lenders.
so who keeps the property?
Property division in divorce proceedings isn't dictated by a fixed formula. Instead, courts consider various factors to achieve a fair outcome. These factors include the duration of the relationship, presence of dependent children, financial and non-financial contributions to property acquisition, and the future earning capacity of each spouse.
What are our options?
When dividing assets in a divorce, your mortgage is a major consideration. Here are three typical ways to handle the mortgage:
Refinance the Mortgage One partner can refinance the mortgage under their name, buying out the other partner's share. This option requires the refinancing partner to qualify for the mortgage on their own, which will depend on their financial stability and creditworthiness.
Sell the Property to Your Partner If one partner wishes to keep the home, they can buy the other’s share. This requires the purchasing partner to secure financing independently, assuming they meet lender criteria for affordability and credit.
Sell the Home and Split the Proceeds If maintaining the mortgage is too burdensome, selling the home and dividing the proceeds provides a clean break. This is practical if neither party can afford the mortgage solo, or if both parties prefer to start fresh.
Choosing the right option involves careful consideration of each partner’s financial situation and long-term goals. Consulting with financial advisors and legal counsel can provide guidance tailored to your specific circumstances.
This is where an experienced mortgage broker can really add value.
Having access to an experienced mortgage broker will enable a thorough review of your assets, liabilities, income and expenses. It will equip you with a solid understanding of what you can and can’t afford before you go in to negotiate.
Lisa Bridgett, our Principal Broker will help you navigate this process. She is an expert mortgage broker with widespread experience in helping clients through the transition of separating their lending during a divorce.
assess your needs and income upfront
calculate your borrowing capacity and what you can afford
identify best lender option that suits your unique situation
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Savvy Finance Pty Ltd ABN 85625275667 is authorised under LMG Broker Services Pty Ltd Australian Credit Licence 517192. The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates subject to change. Approved applicants only.
