What Happens to a Joint Mortgage After Separating?

young couple looking away from each other

If you break up with a partner, it can have far-reaching consequences including your mortgage liability. Knowing what happens to a joint mortgage after separating can help you move on after a break-up.

The good news is breaking up doesn’t need to create chaos with your mortgage and there are several options available to you. This guide examines what happens to your mortgage after a separation and how you can combat any problems that may arise.

Let’s explore separation and mortgages further.

What is a Joint Mortgage?

A joint mortgage is a loan taken against a property with another person (or in rare cases more than two people). Both people named on the mortgage are jointly and severally liable for the monthly mortgage payments. This means you are responsible for the amount on the mortgage in full if the other applicant fails to pay.

What Should You do with Your Mortgage Following a Break-Up?

When you break up with someone there are likely going to be many aspects affecting your life. Separations are emotionally taxing and in the first instance you should reach out to friends and family for support.

You should also look at your finances and address any financial commitments you have with your ex. Discussing your finances with your ex may be incredibly difficult, but you should tackle the situation head on.

Decide how the monthly mortgage payments will be made and by whom. You should also contact your mortgage lender and inform them of the separation.

Can a Joint Mortgage be Paid by One Person?

Yes, it is fairly common for one person to cover the mortgage payments after a separation, especially in circumstances where one partner has more income than the other.

If your ex-partner volunteers to pay the monthly mortgage payments you should check your mortgage account regularly to verify that the payment has been made. If the payment is partially made or missed, you should make the payment yourself to keep your mortgage up to date.

Once you have covered any difference in the money owed you will need to discuss the mortgage again with your ex-partner to see if your mortgage payment arrangement needs changing.

Remember, although you may have an agreement with your ex over the mortgage payments, if a payment is short or missed, a lender can pursue you for the missed funds. A lender will not be concerned about who is paying the mortgage – they will be concerned the mortgage is paid on time each month.

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What Are My Options During a Joint Mortgage Separation?

Making mortgage payments on your current mortgage will often be a short-term solution until you can decide what you and your ex-partner want to do with the property.

Some people opt to sell the property and settle the mortgage. Dividing the remaining profit from equity equally between each person. This is a clean break and allows you and your ex to move on without a joint financial liability.

In some cases, especially if one partner wishes to reside in the property, you might find selling a house problematic.

What if My Ex Wants to Stay in the Property?

If one of you wants to keep the property you should arrange for a property valuation. This valuation allows you to ascertain how much money you are owed from your portion of the equity.

This can be calculated in the following way:

First take your property value, for example £200,000. Subtract the amount of mortgage capital outstanding (without interest).

If your mortgage capital is £150,000, you will both own £50,000 in equity using the above example. Divide the amount of equity in half and you will have the amount your ex owes you – in this case £25,000.

Remortgaging or Buying Out

In the above-mentioned situation, your ex will either have to remortgage at the higher value to pay you the £25,000 or pay you from their existing funds.

Remortgaging to buy someone out can be tricky for two reasons:

  • There might not be enough equity to remortgage at a higher amount.
  • Your ex may not be able to pass the affordability calculation on their own.

Whenever a lender offers a mortgage product they will require a certain amount of equity to be owned by the individual applying for the mortgage. This is commonly known as a deposit, but in cases of remortgage, it will be the percentage of equity held by the applicant.

If the amount of equity is too low for a lender’s risk requirements, they may decline a mortgage application. Likewise, if your ex can’t demonstrate the mortgage is affordable each month on their own, a lender will decline.

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What Should I do With a Mortgage After Separation?

Despite the highly charged emotions, it is best to try and compartmentalise your financial situation after a separation. This will allow you to deal with the mortgage responsibly and not allow blame or other break-up issues to affect your mortgage.

There will be plenty of time to air grievances with an ex-partner, but a mortgage or any other financial commitment should be kept separate from any ongoing dispute.

There can be a tendency for people to weaponise financial commitments after a breakup and this ultimately serves no one. Mortgage liabilities will remain, even if your relationship doesn’t and a mortgage lender will do everything they can to recoup losses.

To avoid problems, you should communicate with your ex-partner to work out a solution that you are both happy with.

How Can a Mortgage Broker Help?

Once you have discussed the mortgage with your ex-partner, it is best to contact a mortgage broker to ensure the plan you have is feasible. If you’re going through a divorce and in need of a mortgage capacity report we can help with that too.

If one person wants to remortgage to buy the other out, a mortgage broker will be able to advise if this is possible and find the best mortgage deal for the situation. Contact us today to discuss your mortgage after separation.

Gerard BoonB.A. (Hons), CeMAP, CeRER

Gerard is a co-founder and partner of Boon Brokers. Having studied many areas of financial services at the University of Leeds, and following completion of his CeMAP and CeRER qualifications, Gerard has acquired a vast knowledge of the mortgage, insurance and equity release industry.