When you break up, a lot comes at you, also about money matters, such as the mortgage and taxes. As soon as you get divorced and have a house with a mortgage together with your partner, you can choose to put the house and the mortgage loan in one name if one of both of you wants to continue living in the house. In this article you can read more about how you can put the mortgage in one name in the event of a divorce, buy out your ex partner and answer the question: can I continue to live in my house?
Divorce and put mortgage in one name
You have made a final decision to get a divorce. You have taken out a house and a mortgage together.
If one of you wants to stay in the house, the next step is to buy out the other and take over the mortgage. If you bought out your ex and put the mortgage in your name, your former partner is no longer responsible and jointly and severally liable for the mortgage. The mortgage is then in one name and joint and several liability has been discharged. In order to transfer the mortgage, the following steps will have to be completed.
Evaluation joint home: how much is the house worth?
Determine the value of the home together with an appraiser or real estate agent. There may be costs associated with an appraisal and valuation. It is also possible to ask a broker to estimate the value. That is often free of charge. Within our network we have access to reliable and good brokers, who are happy to help with a valuation.
Distribution of the value of the property
The division of the value of the house has to do with the way you have lived together.
Not only is the form of cohabitation an important aspect in the division. The agreements made at the time when you got married are also important in the division of the house:
- Community of goods (married before 1 January 2018): You both own half of the house. The mortgage is therefore divided 50/50.
- Limited community of property (married after January 1, 2018): Was the house yours before you got married? Then the house will remain with you even after the divorce or you must have determined this differently via different agreements.
- Marriage or partnership conditions: The division of the house depends on the agreements that you both have made between themselves.
Buy out ex-partner in divorce: how does that work?
It is an opportunity to buy out your ex-partner. A mortgage advisor from Bliss can help you to determine whether this is also financially feasible. In that case, you take over your ex-partner’s share in the existing mortgage. That can certainly be attractive, because buying out an ex-partner is often cheaper than selling the house, as it saves you time and money. Consider, for example, the lack of sales costs that a broker will want to charge in the event that you sell the house. How this is done has to do with the situation whether there is surplus value or whether the house may be under water (undervalue). In the case of equity, the house is worth more than the existing mortgage on the house. In other words, the value is higher than the mortgage. When the house is under water, this is exactly the opposite and the mortgage is higher than the value of the collateral.
How exactly does the buyout work?
If you are married on the basis of community of property, you are both entitled to 50 percent of the value of the home. Suppose you want to continue living in the house. In the event of equity capital, it is the intention that you have to buy out your partner for half the difference between the value of the house and the remaining amount of the mortgage on the house. Is there a situation in which the house is underwater with a negative value? In this situation, your ex-partner pays half of the net worth.
Buy out ex-partner at home equity: advantages and disadvantages
If there is an equity surplus, buying out your ex-partner works as follows. When you separate and there are children involved, it is nice if the children can continue to live in their old familiar environment. The hassle and additional stress of moving, going to another school and having to make new friends can be extra annoying during the divorce. Divorce is of course not fun for the kids, but being able to continue living in the house does have major advantages.
A disadvantage of buying out the ex-partner entails that the monthly costs from that moment on will be borne by the person who bought out the other. It is important to consider in your decision to buy out the ex-partner whether the monthly costs are justified and the mortgage can be paid properly as soon as the loan has been registered in one name.
Half of the mortgage to another mortgage form
Due to changing and stricter regulations regarding the loan rules since 2013, when taking over an interest-only mortgage by the buying partner, at least half must be financed with a mortgage type, with repayments being made during the term. This part is often financed with an annuity mortgage.
Which documents do you need?
The divorce must first be completed before the mortgage can be taken over. Therefore, do not forget that a so-called deed of division must be drawn up by a notary. This document, which is also called a deed of separation and division, is required to put the house in your name. Other divorce documents are also important. For example, the document in which you and your ex-partner have recorded the agreements: the divorce settlement.
The lender also wants to know what your income is. Therefore, pay slips and income will be requested.
Are you an entrepreneur? Then the bank will ask for income tax returns and the annual accounts of your company.
We help with your mortgage in case of divorce and separation
Divorce is a difficult time emotionally. There is also a lot at stake for you financially and fiscally.
Arranging matters concerning the mortgage is important not to forget. Are you not yet divorced?
Together with our lawyers, lawyers and mediators from Q Divorce Advisors we ensure that a confrontational divorce is prevented and that the divorce and mortgage with all the hassle involved. comes and sees it properly arranged in one go. Would you like to know more about your options to continue living in the house, or would you like to know more about the consequences of the divorce on your mortgage? Or do you need advice about putting the mortgage in one name? Make a telephone appointment without obligation and free of charge with one of our advisors at Bliss.