If you are getting divorced or dissolving your civil partnership, one of the biggest financial decisions you could face is what happens to the family home. Find out what you need to do and what your options are.
This article is aimed at separating couples who are trying to work out what to do about the family home.
If you are in the early stages of divorce or the dissolution of your civil partnership and want some information about protecting your rights to live in the home, read our guide Protecting your home ownership rights during divorce or dissolution.
When you divorce or dissolve your civil partnership, there are several options you have about what you do with the family home.
You might decide to:
In addition to the options outlined above, a court in England or Wales can defer the sale of the home through what’s called a ‘Mesher’ order.
This can put off the sale of the home until a specific event triggers the sale – for example, the youngest child turns 17 or 18.
The net sale proceeds are then divided in accordance with the court order.
A court can also use a ‘Martin’ order to defer the sale of the house, but importantly it gives one person an entitlement to occupy the property for life or until remarriage.
This is most often used where the couple don’t have children and the other person does not immediately need the money to put towards their own needs.
The value of your home will be taken into account when working out your financial settlement if:
you bought it after you married or became civil partners, or if you both lived in it as a family home before the marriage or civil partnership.
If you decide to transfer the home to one of you, it should be valued on a date that you and your ex-partner (husband, wife or civil partner) agree between you.
Normally, you’d choose a date as close as possible to the date of the transfer.
Although most couples who divorce or dissolve their civil partnership don’t go to a full court hearing to settle financial disputes, it’s a good idea to have an understanding of what the courts would decide in respect of the family home.
If you have children, especially if they are young, the court will take into account the fact that they need somewhere suitable to live with each parent.
The approach taken by the court does vary slightly around the UK and the eventual outcome will also depend upon your own individual circumstances.
As parents, it’s important to keep the needs of your children uppermost in your minds at all times during a divorce or dissolution.
This includes trying to disrupt them as little as possible.
However, many families will experience some “downsizing” as a result of a divorce or dissolution.
Many couples who have a joint mortgage and who divorce or dissolve their civil partnership try and sort out the mortgage so that only one partner has their name on it.
Whether this is possible will depend on the couple’s financial circumstances.
The advantages of doing this are:
If you want to take over the mortgage in your name alone, the lender will want to make sure that you can afford the payments.
Under Financial Conduct Authority (FCA) rules, lenders must ask in-depth questions and carry out more checks to make sure that you can afford a mortgage.
If you can’t afford to take over the mortgage, you might be able to get a ‘guarantor mortgage’.
This is a mortgage where a close relative (or your ex-partner) agrees to guarantee the mortgage payments if you can’t.
Becoming a guarantor is a serious legal step as it means you are responsible for paying the whole mortgage if the mortgage borrower cannot.
Make sure the would-be guarantor takes independent legal advice and talks to a mortgage broker before they agree to anything.
Find out about a clean break or spousal maintenance in England, Northern Ireland or Wales, or a clean break or periodical allowance in Scotland as part of your divorce or dissolution financial settlement.