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How To Deal With A Mortgage

If there is a mortgage on the home, you will need to take this into account when deciding what to do. If one of you stays in the home, will the mortgage be affordable and who will pay it? Is it possible to pay off the mortgage? Can the mortgage be transferred to just one of you or would remortgaging make sense?

Keeping up the mortgage payments

If the property is mortgaged, you and your spouse or civil partner will need to think about how the monthly payments are going to be met while you are deciding what will happen to the it. You will also need to think about whether one of you can afford to stay in the property in the longer term or whether it will have to be sold, either immediately or at some point in the future.

If the mortgage is in your name or joint names, make sure that it continues to be paid as any late payment or non-payment could affect your credit rating. This could make it difficult for you to get a new mortgage, loan or other credit in the future (see Managing money – Borrowing for more details).

You may want to speak to your mortgage company at an early stage to explain that you are going through a separation. Some mortgage companies will let you reduce the monthly repayments (for example by changing the mortgage from repayment to interest-only mortgage – see Jargon made clear) or take a payment holiday for a few months to give you some breathing space.

You will also need to think about how to keep up payments on any mortgage protection policy that you have. You can find more information about mortgage protection in our Your money section

Who pays the mortgage?

If you and your spouse or civil partner jointly own the property, it is likely that the mortgage will also be in joint names. It is important to check this because if it is, you are both liable for the full amount of the mortgage. This means that, if the repayments are not kept up, the mortgage company could seek payment of the whole sum owed from you.

When you have been married or in a civil partnership, the courts have the power to order one of you to pay maintenance to the other – see The steps involved – the settlement – Income and Managing Money – maintenance. Maintenance payments (either before or after a final settlement is reached) can include the cost of mortgage payments.

Paying off the mortgage

As part of a final settlement, you and your spouse or civil partner might like to consider whether it is possible to pay off the mortgage so that one of you owns the property outright. If you cannot reach an agreement, a court can order you or your spouse or civil partner to pay either a lump sum (to pay off all or part of the mortgage straight away) or maintenance, which could help you to pay the mortgage off over time. Mortgage lenders will normally take maintenance payments into account as a source of income when assessing how much you can borrow.

Transferring the mortgage or remortgaging

When a property is transferred between spouses or civil partners, and provided the mortgage company agrees, the mortgage is normally transferred into the name of the person who is keeping the property.

Sometimes, the person who has given up their interest in a property will act as a guarantor, which means that they will be liable for some, or all, of the mortgage if the other person doesn't keep up the mortgage repayments. Acting as guarantor can affect the amount that a mortgage company is willing to offer you to buy a home of your own in the future, so you should consider taking advice from an independent financial adviser before agreeing to act as a guarantor.

You may be able to make your mortgage more affordable by switching to a different mortgage on better terms (for example a lower interest rate). You can shop around for mortgage rates on comparison websites  Consider getting help from a mortgage adviser - see Useful Links. See Managing money – Borrowing for more details.

There is normally no capital gains tax to pay when you sell your only or main home, but there could be tax on your share if you moved out more than three years ago or you have already bought somewhere else and declared it as your main home. Tax may also be due in some other situations - for example, if you have been running a business from home. Consider taking advice from a tax adviser – Useful links.

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