For many of us, the family home is our most valuable asset and it can be very difficult for spouses to agree how to deal with this asset when they reach the conclusion that their marriage is at an end.
There are several different ways in which spouses may chose to divide the “family home” asset on divorce, such as selling the property, transferring it into one parties’ sole name, or agreeing to defer the sale until the children have reached a certain age. The list is not exhaustive and you should seek legal and financial advice on the options available to you. You could save time, money and heartache if you are able to avoid Court proceedings and reach an amicable agreement with your spouse.
Whether you retain the family home or are looking to purchase a new property, if you hope to take out a mortgage after your divorce (or change the terms your current mortgage) you will need to be able to show your ability to meet the repayments. Remember, the existing lender is under no obligation to remove either of you from the mortgage or to transfer the mortgage into your sole name.
In 2012, 48% of divorcing couples had at least one child under the age of 16 living with the family. If you are one of the 48 percent, it is likely that child maintenance payments from your ex-spouse will become an essential part of your household income. Whilst previously it may have been difficult to persuade a lender to take child maintenance into account as part of a mortgage application, lender’s attitudes are changing.
Whilst some lenders may still refuse to accept child maintenance as a form of income at all, limiting single parents’ access to the mortgage market, many are increasingly willing to take into account child maintenance payments if they are governed by the Child Maintenance Service (CMS) or a Court Order. Some lenders may even be prepared to take this income stream into account if you can show payments over several consecutive months. In January 2016, it was announced that one lender would be taking into account 100% of payments received through child maintenance and, as lenders continue to search for more creative ways of encouraging mortgage applications, it is likely that the number of mortgage lenders offering this will only increase. Lending criteria however remains inconsistent between mortgage lenders and you should take independent financial advice to explore the options available to you.