Divorce and property. FAQ's when lending is involved.
I think if you were to 'Google' the topmost stressful life events, you are more than likely to find divorce and moving somewhere close to the top. Divorce, even when you are happy to be moving on, is a major stressor in you and your family's lives. This time of life brings with it a new journey and presents a lot of unknown territory and questions. I hope to be able to help with the questions you may have that relate to property.
When it comes to property settlements during divorce, depending on your situation you may have the opportunity to keep the house. When this involves lending, the five most common questions I receive are: Can I just take my ex-partners name off the loan? Can I afford to keep the house? Will the bank lend me the money? How do I do it? What if the answer is still no after talking to all the banks?
Let’s me expand on these questions below.
Can I just take my ex-partners name off the loan?
Short and sharp answer to this is no. Even if your partner left the family home and you’ve been solely responsible for making repayments, you will still need to apply for a new loan to be able to take the other person’s name off the mortgage and the title.
Can I afford to keep the house?
Now is a good time to do a new family budget considering the new family structure, incomes and outgoings. You will most noticeably have a reduction of one wage, but you may have an increase in family tax payments, and possibly pay or receive maintenance.
Will the bank lend me the money?
Once you’ve done your budget and decided that not only do you want to keep the house but that’s its affordable, it’s time to speak to the banks. This usually starts with a visit to your current lender. If they say no, please don’t be disheartened. It is at this point that I see most of my clients. No doesn’t necessarily mean no with the other 35 odd lenders that are out there. Banks have different policies. Income that one bank will accept, another won’t, so never accept one no as a final answer. Plough on or engage help.
How do I do it?
Once you’ve got the lending sorted it’s time to contact a solicitor to organise the transfer forms, stamp duty exemptions, and lodge these with the lands department in your state. You can then discharge the old mortgage with two names on it and have the new mortgage registered against the title with just your name on it.
What if the answer is still no after talking to all the banks?
Sometimes it just takes a little creative thinking. You might have only just gone back to work to support your new life, can only work part time, or you’re newly self-employed so at the moment a standard loan won’t work. But with the right advice and the right structure there may still be ways that you can keep the house.
Good luck and feel free to get in touch if you have any questions.