Life changes, part 2: Divorce and separation
There are few life changes that will affect your financial situation as significantly as a divorce or separation from a partner with whom you share a mortgage. Obviously, splitting up is not something you anticipate happening when you invest in a home with someone, but unfortunately such situations do arise.
Divorce rates down under have sadly been increasing in recent years, according to ABS data. A total of 48,517 divorces were granted in Australia in 2015. Most of these tend to occur in middle age; the average age of divorce for Aussie men is 45 and 43 for women.
As your home is likely the largest asset you own, it’s important to ensure that it doesn’t end up causing you excessive financial stress. For part two of this three part series on life changes (read part one on moving in together), we look at how a divorce or separation can affect your mortgage finances and how a mortgage broker can assist you during this difficult time.
What are my options?
Obviously the major decision will be whether or not you’ll keep your existing home. The equity tied up in your property could make a big difference to the security of your finances in the future.
One solution is to sell the house you own together and use the profits to purchase a new property.
Alternatively, you may decide to refinance your home loan, putting the new mortgage under a single name. Should one of you decide to remain in the home, the other partner can put the profit from selling their share of the mortgage towards a new home loan.
What are the main challenges?
One of the main challenges will be adjusting to living apart. Single person homes are a growing trend among Australians and currently make up approximately a quarter of all Australian households, according to the Australian Institute of Family Studies (AIFS), so you certainly won’t be alone in your situation.
When you have the future of your kids to consider as well as yourself, the process can become even more stressful. Almost half of all Australian divorces involve children, according to ABS findings.
As we’ve discussed in a previous blog post, you’ll face additional challenges if you’re female; a woman’s finances are more greatly affected by divorce and separation than those of a man, according to the AIFS.
Of course, there will also be plenty of paperwork and legal documents to sort out. If your home loan is under a joint tenancy agreement, it will be more difficult to divide the share of your property than if you and your former partner were tenants in common.
How can a mortgage broker help?
Mortgage Choice brokers are there to assist you when you’re going through a difficult separation or divorce by helping you through the process of refinancing your mortgage or getting a new home loan. If you’re in the position of needing to take out a home loan on your own, as client Belinda Fellows did, we make it easier.
“I’d never had a mortgage on my own, so it was a pretty big thing knowing I only had myself to rely on – if you get sick or something else happens there’s no one to fall back on,” she said. Belinda was successfully able to find a suitable home loan with the help of her broker Deb Smith.
We take the stress away from you so you can focus on your family. We’re also free to chat to, so you won’t be up for any additional costs.