Mortgage Capacity Reports Explained

Going through a divorce can be a difficult time with lots of factors to consider, including how your assets and property will be divided. If you have been told by your solicitor or the court that you need to provide a mortgage capacity report, you may be wondering what is it and why do you need one? These reports form an important part of the court process when going through a divorce and provide a clear understanding of your financial position. 

The good news is obtaining a mortgage capacity report is straightforward and you can provide the court with the information they need with ease. At Boon Brokers, we can get a report together within 1-working day.

What is a Mortgage Capacity Report?

A mortgage capacity report, or mortgage capacity assessment, outlines the possible mortgage amount and type you may qualify for after a divorce or separation. It is requested by UK Divorce Law Courts and is commonly used to assess whether you can obtain a mortgage to buy out your ex-partner’s share of the property. It considers various factors, such as your income, expenditure and credit history to identify your borrowing capacity post-separation.

As of 1st April 2022, they are required for every case that is dealt with via Family Court proceedings and may also be used in other legal situations where financial settlements are required.

Here is a video we have produced to explain Mortgage Capacity Reports in more detail:

Why Do I Need a Mortgage Capacity Report?

The court will use a mortgage capacity report to fairly decide how to split the assets you both hold. Part of this consideration will be whether one party has the ability to buy the other party’s share in a jointly owned property.

It may be the case that the court requests reports from both parties to make a fair assessment.

It is an essential tool to make sure assets are divided fairly, help both parties plan their future finances and avoid any disputes. 

What Information will I Need to Provide?

There are several pieces of information you will need to provide. These are:

• Any current mortgage information including the total amount left to pay
• A property valuation
• Details about your income and expenditure
• Information about any other assets you hold, such as investments or pensions
• How your finances will be impacted by the divorce
• Additional financial information such as dependents or childcare costs

Because a mortgage capacity report forms the basis of a legal judgement you should ensure all the information you provide is as accurate as possible. Keeping the information accurate is vital to comply with the court order. It also protects you from the court misunderstanding your situation and making a detrimental ruling.

Who Produces the Report?

Our reports are always prepared by fully qualified and experienced mortgage brokers. They are more reliable than an online mortgage calculator or even going to your local bank. The document is often shared among solicitors and may be used in court, so it’s important for it to be accurate, clear and concise, and prepared by an FCA-qualified broker.

How Much Does a Mortgage Capacity Report Cost?

The cost varies depending on the broker you choose to compile it and the type of report itself.

Nil Capacity Report

A report from us can cost as little as £149.99 if you have a nil-mortgage capacity. For example, if you have recently gone self-employed, have significant adverse credit or any other reason that results in a maximum mortgage sum available of £0, you will require a nil-mortgage capacity report.

Single Capacity Report

If you have mortgage capacity and require a Single Mortgage Capacity Report, we charge a flat fee of £299.99, regardless of its complexity. The reason for the increased cost is due to the additional level of work required to generate the report. We conduct mortgage affordability assessments with a whole-of-market range of regulated lenders.

There are instances where complex reports could cost over £1000 with other brokers, which is more likely if you have multiple mortgaged properties or are a high net worth individual.

Joint Capacity Report

You can apply for a joint report with a new partner, which, again, adds a level of complexity. We charge £499.99 for a joint mortgage capacity report. If your ex-partner also requires a mortgage capacity assessment, you can pay for a joint report instead of two single ones, which will result in a £100.00 saving.

How Can I Get a Mortgage Capacity Report?

Before committing, it is worth asking the court if an agreement in principle would be sufficient evidence. In some cases a court will accept an agreement in principle and you will not need a full report.

An agreement in principle can be obtained with little to no upfront cost.

If you need a report you should approach a mortgage broker, like Boon Brokers, to complete it on your behalf. It’s important to choose your mortgage broker carefully because even a minor error in the report can have a long term impact on your finances post-divorce.

Benefits of choosing a reputable broker:

• Help achieve a fair outcome in court
• Allow you to explore various financial situations and outcomes
• Prevent additional legal fees

Our Mortgage Capacity Report Process

We have created a quick and easy bespoke process:

1. 1. Complete a Fact-Find

Your broker will setup your account on our online client profile system. You will receive automated correspondence via e-mail with a password set-up link. You can then login to complete a fact-find on the system.

1. 1. Invoice

Your broker will review the fact-find and determine which mortgage capacity report is most suited to you. A suitable invoice will then be issued, which is payable on receipt. The Fact-Find will also be sent to your e-mail address to E-Sign.

1. 1. Generate Report

Once the payment has been processed and fact-find signed, we will generate your report. Our current turnaround time for the capacity reports is 1 working day.

Speak to a Specialist

Going through a divorce can be a difficult time, but we are here to help you get your finances settled. Whilst the report is not regulated, we are a Whole-of-Market broker that aims to provide you with a detailed and comprehensive mortgage capacity report.

Book your consultation with us today and discuss how we can help you.