Are you one of the 49,000 couples in Australia that are going to file for divorce this year?
Divorce is often a challenging experience and can be emotionally and financially taxing for all parties involved as our good friends Bruce and Sharon recently discovered.
Read on to find out how they survived the messy minefield of divorce
Bruce and Sharon had been happily married for the last 8 years, however they recently decided to go their separate ways due to irreconcilable differences. Amidst the emotional heartache of who would have full custody of Spike their beloved Labrador, they faced the challenge of dealing with their outstanding mortgage.
Bruce and Sharon were presented with three options:
1. To sell their property and split their assets;
2. For one party to buy out the other parties share of the mortgage;
3. To continue to co-own the property.
Make your decisions with a future-focus. While right now purchasing another home may seem out of reach or undesirable it’s important you ensure that you are making decisions which will not restrict you in the future if you happen to change your mind.
Bruce and Sharon were unsure of the necessary actions required for each option, and so after much research they discovered that selling their property was more straight forward than they first thought. Below are some key points that could assist you in making your own decisions:
1. Selling the property and dividing assets.
- You may consider selling the property to receive equal benefits.
- The advantage of this option allows each party to feel a sense of closure that both the divorce and property issues have been settled.
Click here for more information on property valuation.
2. One party chooses to buy out the other from the mortgage and retain ownership.
In order to buy out your partner’s share of the loan it’s important to understand that you cannot simply ‘take over’ your existing home-loan. While this is common practice in other countries, us Aussies do things a little differently. You must instead re-apply under your individual name.
- Just like any other loan you would take out, your income and credit history must be approved to demonstrate that you have the capacity to make full loan repayments.
- An added bonus: In most cases it is unlikely that refinancing process would incur any additional stamp duty taxes.
3. Continued co-ownership of the property.
- Whilst this may not be the most popular solution in all situations, many families choose to opt for this decision especially when children are involved.
- In this case both parties remain on the loan agreement in the form of a business agreement whereby each spouse is 100 percent liable for the loan repayments.
- The benefit of this option relates to the continuation of a stable family environment.
Continue to make your mortgage repayments. It is highly important to ensure that you have a blemish free credit history in order to minimise the chances of encountering difficulty should you wish to apply for a future loan.
After evaluating the possible options and considering their personal circumstances Bruce and Sharon agreed to sell their property and divide the remaining assets. Upon the closure of this agreement both Bruce and Sharon had the freedom to start a new chapter.
Speak to a mortgage expert today about your situation on 1300 307 155
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