Divorce and mortgage
Divorce is never pleasant, but it’s crucial to ensure everything is properly arranged when you and your partner separate. The financial impact of a divorce is significant, especially concerning the mortgage if you jointly own a house. Our mortgage advisors are here to assist you during this process.
What happens to the mortgage if my partner and I separate?
If you and your spouse separate, it affects your living arrangements. There are several possibilities regarding the mortgage in the event of a divorce. We briefly explain these options.
Selling the house and paying off the mortgage
The mortgage is calculated based on the income of two individuals. In the case of a divorce, sometimes the only option is to sell the house and seek a more affordable accommodation. Even if it is not financially necessary, there may be other reasons to put the house up for sale.
When selling the house, it is important to make clear agreements about the division of the proceeds or any residual debt. Additionally, you need to decide on the asking price and the sales process. For instance, will you hire a real estate agent or sell the house yourselves? Discuss who will stay in the house until it is sold and how the costs will be divided during the transition period.
If you are considering buying a new house, you will likely need a new mortgage. The mortgage lender will want to see the divorce settlement to understand how your financial affairs are arranged, such as spousal support. Therefore, it is advisable and required by most lenders to finalize the divorce before arranging a new mortgage.
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Taking over the house and the mortgage
You may also choose for one of you to remain in the house and take over the mortgage alone. This is called ‘release from joint liability’. But what should you consider in this situation?
When making arrangements, it is important to determine the value of the house. This can be done by having it appraised, checking the WOZ value, or looking at recent sale prices of similar properties in the area. Next, you need to establish the remaining mortgage amount. The (negative) difference between the house value and the remaining mortgage amount is the equity or negative equity.
If one of you stays in the house, the mortgage must be transferred to that person’s name. The mortgage lender must agree to this, which means they will assess whether the income is sufficient to cover the entire mortgage. The person staying in the house usually buys out the other for half of the equity, compensating the departing party for the equity they are giving up. This buyout can be financed in three ways: with savings, an increase in the mortgage, or a combination of both. If the mortgage is increased, the lender must agree and ensure that the remaining person can handle the higher financial obligations. Additionally, a notary must draft a division deed and register the new ownership structure with the land registry.
Also, consider temporary arrangements if the mortgage lender does not agree. Decide whether you will sell the house after all and how you will share the house’s costs until then, such as mortgage payments and utility bills.
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Keeping the mortgage as it is
It is possible that the person staying in the house cannot afford the mortgage payments alone, but you still want to keep the house for now, perhaps until the children have left home. In that case, you can choose to remain co-owners and continue paying the mortgage jointly.
It is important to note that if one of you leaves the house, that person is only entitled to mortgage interest deduction for two more years. If you agree that one of you will pay the full amount of interest and lose the interest deduction, the paid interest can be declared as alimony to the Tax Office. This way, it still serves as a tax deduction. For more information, you can visit the Tax Office’s website.
BLG Bespaarhypotheek2,99%
ASN Bespaarhypotheek2,99%
Woonnu3,03%
Obvion Woon Hypotheek3,04%
Reguliere hypotheek3,05%
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