December 11, 2015
Feeling a bit lost after a divorce or separation from your partner? When you own property together, things can get a bit messy, and if you are looking to buy a new home on your own, do you know what to do?
Here are some tips to help you when buying property after a separation or divorce.
Selling the house and dividing the proceeds
Dividing assets fairly and deciding on what happens to the house can be a hard thing for both parties to do. If neither person wants to remain in the home or buy the other out, the simplest approach could be to sell the property and divide the proceeds once the current mortgage and other fees are paid out. The benefit of this approach is that it gives both partners a clean break and a chance to start over with their share of proceeds from the sale.
Selling the house gives both partners a chance to start over.
In order to move ahead on a sale, once you’ve agreed on how the proceeds will be divided (and you’ll need to seek legal advice on that) you’ll need to find an agent and agree on a selling price. This may require working with your agent to come to a joint agreement on how to respond to offers, as well as what constitutes an acceptable reserve price if you decide to sell by auction. While your agent can guide you through this process, ultimately the decision on price must be made by both parties.
Buying out your partner or vice versa
Depending on your situation, it may make sense to keep the family home and buy out your partner’s share. If you do plan to buy out your partner, you can either pay in cash or, more commonly, look into obtaining a new mortgage. In Australia, if both names are on the mortgage agreement, one person is not allowed to simply take over the mortgage. Rather, you’ll be required to refinance the home loan and put the new mortgage in your name only.
Getting a loan for a new home
Going through a divorce is never easy, but it may not mean giving up on your dream of home ownership. Fortunately, getting a loan to buy a new home after a divorce or separation can be straightforward, depending on your circumstances. As with any loan application, you’ll need to prove that you qualify for finance under your lender’s lending criteria, which may include:
A good repayment history on your current home loan.
Evidence of steady employment and income sufficient to repay a loan of an amount you wish to borrow.
A good credit history.
Sometimes, however, the circumstances leading up to divorce can result in mortgage payments being missed, putting a blemish on your credit record. In this situation, it’s important to work with your lender, who may be in a position to approve your loan if you can prove you were able make payments during the time they were missed.
If you plan on applying for a loan after a divorce or separation, the key is to plan ahead. First seek advice from your lawyer. We can then help you with the rest as our goal is to make this as easy and stress free as possible for you. Please give us a call on 9517 1818 to discuss your situation.