With the increasing percentage of divorces, property owned under mortgage by the two partners can proof difficult in meeting the monthly mortgage payments. It calls for solutions that can leave both partners satisfied and remortgaging stands out as one of the most viable options you can take. For example, one partner may be comfortable with relinquishing the property completely while the other wants to keep owning the property.
All these options can be attained through special arrangements designed to have each partner satisfied. If one partner is not interested in the property any more and does not wish to continue being responsible, the other partner can get remortgage in their name thus relieving the one not interested. This is common in cases where one partner no longer wants to keep staying in the house and prefers to move out and leave the house to the spouse.
Buying out your partner
In case you would like to buy out your partner after a divorce, then you will bear the task of raising sufficient funds to effect this option. You also have the alternative of releasing the equity on the property which can be a great boost especially if the economy is doing well and the house prices are at their best levels. There are various ways in which you can release equity, as follows:
Sell the property and rent it back, with allowance to buy it later on. This is appropriate for those intending to have a few years free of serious financial obligations in order to enable them build up their credit status.
Perform a trade down, which means you sell your home and move out. You will most likely get 95-100 percent of the property’s value, money that you can now use to buy another house.
If possible, go for a secured loan and leave your mortgage unaffected. This can be a fantastic option for those with big redemption because it means they can borrow enough money at smaller fees.
Remortgage the property to a higher Loan-to-Value (LTV) level. With this option, you will have to be careful such that your monthly repayments do not go so high above what you are paying currently (they will often increase).
Overall, when faced with a divorce amidst mortgage responsibilities, you should start by exploring what every individual partner wants. You can then seek remortgage after divorce options that suit your interests.
By John Hester