Looking at re-financing your mortgage after splitting with your partner?
Don’t worry. You’re not alone – and with the right advice from an experienced mortgage broker, you can maintain your property ownership dreams, even when you are on your own.

 

What Does Divorce and Separation Mean For My Mortgage?

Each year in Australia, more than 118,000 couples are married. Sadly, one in three of those marriages will eventually end in divorce. The statistics don’t reflect the missing percentage of long-term unmarried couples whose relationship ends with a separation.

And for many of those couples who decide to move on? Property ownership is an important issue.

The legal division of assets that happen when romantic partnerships end mean that, for many people, their home ownership dreams are interrupted and often put on hold.

But the good news is that there is life after divorce and separation and entering the mortgage market is not impossible, with the right planning and advice.

 

Starting Again – Dividing The Family Home

Selling a family home for a divorce settlement is always stressful and emotions run high, which can lead to anger and frustration.

If you’re feeling like that, make sure you talk to a trusted and empathetic friend or family member – or seek professional counselling to help you through the hardest times.

If you do have money to lay the foundations to start again, it’s important to invest in property wisely and be patient for long-term wealth creation. It might be that you cannot afford the home you need to live in right now but you don’t need to give up on being a property owner. Shifting your sights to think as a property investor can be a positive pathway for you to return to life as a property owner and with some careful research and smart buying, you can secure an investment property that will create a solid rental return, plus the future benefit of capital growth you can leverage from in the future.

 

Buying out your partner  – Re-Financing After Divorce

Alternatively, it might make better sense for one party to buy out the other in an existing property – meaning you may be able to keep your home.

But be sure to get professional legal advice – and that the settlement you come to is fair for both parties.

Australia laws state that, if both names are on the original mortgage agreement, then one person cannot simply take over the mortgage solo. But by speaking to a trusted, professional mortgage broker, and a lawyer, you can arrange to re-finance the property, pay your ex-partner the agreed share, and then take on a new mortgage in your name only.

Talking to your accountant, or a financial planner or financial counsellor can be an important step – just to ensure that your budget can sustain mortgage repayments comfortably and for the duration of your loan term.

 

Applying For a New Home Loan

With so many lenders in the mix, life after divorce or separation does not mean financial ruin.

Rather than just rely on the whims of one bank to decide the fate or your home loan application, enlist an experienced mortgage broker to take you through all the options. With many lenders having unique products that are tailored to suit very individual needs and circumstances, you will have more chance of finding one that suits your needs.

If you try and do not get approval, talk to your mortgage broker about what the weak links in your application were. Even a shaky credit rating can be repaired with time and patience. Just make sure you pay bills on time and don’t default for your best chance of having access to a wide range of lenders who will be happy to help you get back into the property ownership sector again.

Online calculators can help you figure out a realistic budget for your future mortgage payments and other lifestyle budget needs. Be honest. If it’s not right for you now, it might just mean waiting another 6-12 months to boost up your savings and clear further debt to put you in a stronger financial position.

 

If in doubt, talk to your financial adviser specialists.

Property ownership might be off the radar for now but, with some smart savings and a tight budget, you can be back in the market and looking forward to a brighter financial future.

If you have any questions about your finances, either personal or business, please do not hesitate to contact Lending Specialist on (03) 8805-1800 or email barry@lendingspecialists.com.au