Your Options for the Family Home
When a relationship ends, there are three main options for dealing with a jointly owned property:
- One partner buys out the other – this usually involves remortgaging to release enough equity to pay the departing partner their share, while transferring the mortgage and property into one name.
- Sell the property – the proceeds are divided between both parties, either by agreement or as directed by the court.
- Keep the property jointly – in some cases, particularly where children are involved, the court may order that the property is retained until a future date, such as when the youngest child turns 18.
The most common scenario is a buyout, which requires remortgaging. The new mortgage needs to be large enough to pay off the existing loan and release the departing partner's share of the equity.
Remortgaging to Buy Out Your Ex-Partner
To buy out your ex-partner, you will need to remortgage the property into your sole name. The lender will assess whether you can afford the mortgage on your own, based on your individual income and outgoings. This is often the biggest hurdle, especially if the household previously relied on two incomes.
You will need to agree on the value of the property and how much the departing partner is entitled to. This may be set out in a financial consent order approved by the court, or agreed between you with the help of solicitors or a mediator.
For example, if the property is worth £300,000 with an outstanding mortgage of £150,000, there is £150,000 of equity. If your ex-partner is entitled to half, you would need a new mortgage of £225,000 to cover the existing loan plus their £75,000 share. The lender will need to be satisfied that you can afford this amount on your income alone.
Affordability on a Single Income
Moving from a joint mortgage to a sole mortgage means the lender assesses your affordability based on one income instead of two. Most UK lenders will lend between 4 and 4.5 times your annual income, though some will stretch to 5 or even 5.5 times in certain circumstances.
If your income alone is not sufficient to borrow the amount needed, there are several options to explore. You could ask a family member to act as a guarantor or joint borrower. Some lenders offer joint borrower sole proprietor mortgages, where a family member helps with affordability but is not named on the property deeds.
You should also consider whether you receive any regular maintenance payments from your ex-partner. Some lenders will count court-ordered maintenance as part of your income, which could increase the amount you can borrow. Child maintenance and spousal maintenance can both be taken into account by certain lenders.
Legal Steps and Timing
Before remortgaging after a divorce, it is strongly advisable to have a financial consent order in place. This is a legally binding document approved by the court that sets out how assets, including the property, will be divided. Without a consent order, either party could make a future claim against the other's assets, even years after the divorce.
The transfer of equity, which is the legal process of removing one name from the property deeds and mortgage, is handled by a solicitor or conveyancer. This happens alongside the remortgage and typically takes four to eight weeks once the new mortgage is approved.
Timing is important. If you are still going through the divorce process, some lenders may want to see the financial consent order before approving the mortgage. Others will accept a draft order or a solicitor's undertaking. Discuss the timing with both your divorce solicitor and your mortgage broker to avoid delays.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual rate available will depend on your circumstances. Think carefully before securing other debts against your home.