Here Are Your Mortgage Options Following a Separation or Divorce
Written on 9 March 2025
Having a breakdown in a relationship or marriage is never easy. This blog serves as a practical guide to help you navigate mortgage options during a separation or divorce. Figuring out how to move forward, including discussions with dependents, friends, and family, can be challenging. This process becomes even more complicated when it involves shared financial commitments, particularly the family home and mortgage.
While this blog won’t have all the answers, as everyone’s circumstances are different, it will provide an overview of key considerations and available options.
What Happens to the Home During a Divorce?
For married couples and those in civil partnerships, current laws typically dictate that assets are split equally following a separation. However, in practice, this division is subject to negotiation and potential court involvement, particularly where children are involved or financial contributions to the property are disputed.
Courts prioritise the needs of children, including their housing stability, until they reach adulthood. This is particularly relevant in financial disputes where fair division of assets and responsibilities must be considered. If one spouse has sacrificed career progression to raise children, this is taken into account during financial settlements. Similarly, if one partner was the primary breadwinner, their past and future financial contributions will also be assessed.
Seeking legal advice on the implications of a “Clean Break” or “Maintenance” arrangement is crucial, as each case is unique. Additionally, working with an experienced mortgage broker can help navigate the complexities of securing a mortgage post-divorce. A Mortgage Capacity Report can be beneficial in assessing affordability and may be required for legal proceedings.
What is The 70/30 Rule in Divorce?
The 70/30 rule in divorce is an informal guideline suggesting that one spouse receives 70% of marital assets while the other gets 30%. This is not a legal standard but may occur in cases where one spouse significantly contributed more financially, has primary custody of children, or there are special circumstances like prenuptial agreements. However, most courts aim for equitable distribution, meaning a fair - not necessarily equal - division of assets based on factors like income, debts, and future needs.
Your Mortgage Options After Separation
1. Selling the Property and Splitting the Equity
Selling the home is often the cleanest solution. By selling, you can pay off the existing mortgage and split any remaining equity, allowing both parties to move on independently. This option can also be used to clear any joint debts, such as home improvement loans or car finance agreements.
Challenges often arise in agreeing on a sale price and timing. One party may want to sell quickly, while the other may seek a higher price to maximise equity. Setting clear expectations at the outset can prevent disputes. Additionally, keep in mind the associated costs, such as estate agent fees, legal expenses, early repayment charges, and moving costs, which can reduce the final amount each party receives.
2. Buying Out the Other Party
If one party wishes to remain in the home, they may be able to buy out the other partner’s share. This typically involves transferring the mortgage from joint to sole ownership and securing additional funds, if needed, to compensate the departing partner.
Affordability is key—lenders will only approve a transfer if the remaining partner can meet the mortgage repayments independently. A mortgage broker can explore options, including discussing a Transfer of Mortgage Property (TOMP) with the existing lender or finding a more suitable deal with a new lender.
If the current lender deems the mortgage unaffordable in one name, remortgaging to a different lender may still be an option. A broker can assess market alternatives to help facilitate the transfer.
3. Can You Keep a Joint Mortgage After Divorce?
Some couples choose to continue sharing ownership and mortgage payments, either as a temporary arrangement or a long-term solution. This is more common when children are involved and immediate relocation is not desirable.
In England and Wales, a Mesher Order can be obtained, which allows the sale of the family home to be delayed until a certain event occurs, such as children finishing school. This can provide stability in the short term while allowing both parties to plan their next steps.
What if Neither Party Can Afford the Mortgage Alone?
If neither partner can take on the mortgage independently, options will depend on the level of cooperation between both parties. In some cases, both individuals may agree to continue joint payments for a set period, ensuring that one partner and any dependents remain in the home while the other finds alternative accommodation.
It’s essential to maintain mortgage payments to avoid damaging both parties’ credit scores. If affordability becomes an issue, speaking with the lender early can help explore options such as extending the term or adjusting repayment structures.
Can I Get a Mortgage After Separation?
Even if you couldn’t afford to buy out your former partner, securing a mortgage in the future is still possible. Changes in financial commitments and income levels can improve affordability over time.
Using our “How Much Can I Borrow?” calculator can help assess potential borrowing capacity. This tool provides an estimate based on income, existing commitments, and lender affordability criteria, helping you understand your financial position. Many lenders consider various income sources, including maintenance payments, benefits, and part-time roles.
Additionally, schemes such as Shared Ownership, Joint Borrower Sole Proprietor, and Help to Build may provide alternative pathways to homeownership post-separation.
How to Protect Yourself Moving Forward
Open Communication
Financial discussions can be uncomfortable but are necessary when entering joint commitments. Understanding each other’s financial situation, including debts, savings, and insurance, can prevent misunderstandings and ensure a fair division of responsibility.
Declaration of Trust
A Declaration of Trust (Deed of Trust) is a legal document that outlines how equity in a property will be divided if it is sold or refinanced. This can provide clarity and legal protection in the event of separation.
Managing Finances and Keeping Records
Keeping records of financial contributions ensures clarity if disputes arise. Tracking payments for mortgage repayments, home improvements, and household expenses can be invaluable in legal proceedings.
Financial Independence and Emergency Fund
Having a separate savings fund can provide financial security in the event of a breakup. Building this fund gradually by setting aside a small percentage of income each month can ensure you have a financial buffer when needed. Ideally, saving at least three months’ worth of expenses can offer a buffer while new living arrangements are established.
However, when completing a Form E (Financial Declaration) as part of legal proceedings, all financial resources must be declared. Failure to disclose assets can have legal consequences. Seeking independent legal and financial advice is recommended to ensure full compliance and protection.
Final Thoughts
Separation and divorce can be emotionally and financially challenging. Understanding your mortgage options and seeking expert advice can help you make informed decisions about your future housing situation.
Whether you’re looking to sell, buy out your partner, or explore alternative solutions, speaking to a mortgage broker can provide clarity on the best path forward.
For personalised mortgage advice, contact John Charcol at 0808 303 5528 or enquire online. If you need legal or financial support, the following organisations offer free guidance:
- Citizens Advice – 0808 800 9060
- MoneyHelper – 0800 138 7777
- StepChange – 0800 138 1111
- National Debtline – 0808 808 4000