‘Divorce mortgages’ could be introduced by the end of the year
Reports are being made that lenders have engaged in discussions to introduce an innovative ‘divorce mortgage’ to deal with the increase in over 50s having to sell their homes after separation. Over 50s account for the largest increase in the divorce rate and according to research from Nationwide, 28% of divorcing couples end up having to sell the former matrimonial home.
Divorcing couples often have to sell the former matrimonial home due to the fact that if one partner decides to remain in the home, lenders will often insist on a larger deposit (usually 25%). The partner who remains in the former matrimonial home person may well rely on maintenance payments from their ex-spouse to be able to afford the mortgage and most lenders require a court order stipulating maintenance payments in order to satisfy themselves that the former partner can afford to pay the mortgage. Some lenders will accept evidence of private (non-court) agreements however they will require proof of six months of maintenance income to offer the loan.
Experts have also reported that affordability checks introduced two years ago have made keeping the family home even more difficult after separation.
It is hoped that the ‘divorce mortgage’ would allow one partner to borrow enough money to buy their former partner out for a set period of time, so one half of the couple can stay in the former matrimonial home. This arrangement would be particularly useful for couples with dependant children or where there is a mutual agreement that one partner should stay in the former matrimonial home for financial reasons.
The ‘divorce mortgage’ does not yet exist, however it has been reported that lenders are considering it and have said that it could be introduced by the end of the year.
If you are considering dealing with your finances upon separation our specialist lawyers in our Altrincham or Manchester offices can talk you through your options and help you to decide which option would be the right decision for your situation. Please contact us on 0161 927 3118 for a free 20 minute consultation