If you are facing divorce, your financial assets which include property will be divided between you and your partner during the financial settlement. However, if you are still paying the mortgage on the property during this time, there are settlement options you can take to divide it.

What happens to the mortgage payments during a divorce

No matter the changes in your circumstances, if your name is on the mortgage agreement it means that you still need to pay the monthly payments. This means that even if you do not live in the house anymore, you are still liable to keep up the payments based on your mortgage agreement which is also a legal binding.

Joint Mortgage - If you have a joint mortgage with your partner, you and your partner are both responsible for the payments. Even if one partner stops paying their share of the mortgage, the other will be accountable to carry out the entire payment. It is not about who pays their share; rather, the full mortgage is settled.

The first step if you have a joint mortgage is to inform your lender about your intended divorce. Depending on your circumstances, most lenders in the UK will offer a short term payment holiday, this gives you time to sort out your finances. Although your payments are stalled during this time period, applicable interest rates will continue to apply throughout the payment holiday.

The mortgage is held by one person - Again, this means that you are responsible for the payment even if you are not living in your home anymore. However, if the other partner has ownership or home rights to the property and decides to make the payments, their payments will be accepted by the lender. This does not mean that you are no longer liable if payments from your partner stop.

It is important to remember that defaulting on payments will reflect badly on the credit scores of the person or persons responsible for settling the mortgage.

What are the settlement options available

When it is time for the property to be divided in the financial settlement there are three options available on how to take care of the mortgage and divide the asset. These are:

1.  Sell the home

This is the most straightforward course of action. The equity of the property can be used to pay up the mortgage and the remaining equity divided between the two of you.

If however, you have negative equity on your home, you will need to divide the debt between the two of you or speak to your lender about other available options.

2.  Keep paying the mortgage and sell the house later

A practical way to manage finances for those with children and/or are close to paying off the mortgage. Whether you’re paying the mortgage jointly or alone, you can decide to keep paying the mortgage until a specific event occurs. For example, this could be when the youngest child reaches the age of 18. This step is mostly to give the children stability during a difficult time. To set up this agreement you will need to get a Mesher order from the courts. After the specified event is reached, the house can be sold and the proceeds divided.

3.  Buy out your partner’s share

If you have a joint ownership it is possible for one party to buy out the other’s share of the equity and become the sole owner. In order to do this, you will need to prove to your lender that you are capable of keeping up the mortgage payments by yourself while also buying out your partner. If you are able to pass the assessment of your lender, then you can successfully transfer the mortgage to your name. Keep in mind however that buying out your partner’s share means that you will have to get a bigger loan.

The next step

If you are able to agree on a settlement then you can get a consent order to make the agreement legally binding. If you are unable to agree on a settlement you can use a mediator or ask the court to decide. Speak to a solicitor to help you go through the process.

Property ownership vs mortgage

Paying the mortgage and owning the property are not the same thing. You can pay your mortgage jointly or alone but the property ownership is based on whose name is on the property deed.

However, during a divorce settlement, if the property is considered as the marital home it will be divided with your partner even if you are the sole owner. This is because a marital home, which is a home that was purchased and lived in by both of you during the marriage, is considered a marital asset in the UK.

If your spouse is the sole owner of the property then you need to register for home rights with the land registry to secure your interest. This is so that the property cannot be sold, transferred or mortgaged without your knowledge before the financial settlement. Having home rights also means that even if you do not live in the house anymore, and you are not the legal owner of the home, you still have a legal right to live on the premises. 

Approved by The Openwork Partnership on 06-12-2023

This article is for guidance purposes only and does not constitute advice. You should seek independent legal counsel when going through a divorce.