Who pays the mortgage when going through divorce?

As well as dealing with the different emotions people experience when going through divorce, there are extremely important practical decisions to be made. One of the very first questions many people ask when they come to their family lawyer is who will pay the mortgage during the divorce process.

Who is responsible for a mortgage in joint names?

Firstly it is important to understand that if your mortgage is in joint names, you and your spouse are jointly and severally liable for payment of the same. This means that you are both equally liable for the full amount owing, whether or not you continue to live in the property. It is not enough to suggest that you have paid your half of the mortgage and the other half is your spouse’s responsibility. The mortgage company doesn’t care who makes payment, they just care that it is paid. If the monthly mortgage is not paid in full each month it will affect both of your credit ratings which can cause you real difficulties in the future. In the worst cases, it can lead to the mortgage company issuing repossession proceedings.

Think practically

You may want to ask your mortgage provider for a mortgage holiday, which is a period of time when mortgage payments are suspended. If your mortgage provider agrees to this it will be for a limited amount of time and you need to be sure that you know how you will pay the mortgage at the end of this period. It can however, be a useful mechanism to take some strain off your finances at a difficult time.

Whatever the living arrangements, the mortgage needs to be paid. It may be that you both continue living in the home until a final agreement is reached about the long-term future of the home. This may not be the ideal scenario for either of you, but sometimes needs must.

Most couples would prefer to live separately from the time they decide to separate, which is great if your finances allow it. You need to work together and take a pragmatic approach to paying the mortgage in these circumstances. If the spouse remaining in the property is in the stronger financial position they may well be able to pay the mortgage in full themselves.

More often it is the party in a weaker financial position who stays in the house, often a parent who doesn’t work or perhaps works part-time to make themselves available for the children. That parent may not be able to pay the mortgage payment. The party who moves out is still responsible for the mortgage and must make sure that they can continue to pay the same, on top of their own costs of living independently. They may also be liable to pay child or interim spousal maintenance to the spouse that remains in the house, dependant on individual circumstances. If you can’t meet the running costs of two households between you, you will need to consider staying under the same roof until things are worked out.

Work together to reach a financial agreement

No matter what the interim arrangements are, you probably both want some certainty about your financial future. The best thing you can do is work together within your chosen process to achieve a financial settlement that is fair to you both. A fundamental part of any settlement will be ensuring that both parties housing needs are met, whether this involves one of you staying in the home or the property being sold. Whenever possible, I advise my clients to take a pragmatic view and avoid additional arguments at what is already an emotionally charged time. Many couples find that mediation and the collaborative law process are ideal methods for resolving financial issues, as they can work through different scenarios and options together – including with the presence of an accountant or financial advisor if helpful.

This blog was originally written by Lauren Guy. For a consultation with a member of our specialist family law team please contact us.