This post has been written on the back of what seems a pretty bad year for divorces! We get asked a lot of questions from people looking to obtain information on getting a mortgage whilst going through divorce or following settlemend of their divorce.
As January and February is peak time for break ups (it is known as break up season for a reason), making this post now seems appropriate even if a little pessimistic! It is generally seen as the time where financial stress kicks in and the stress of Christmas and new year. Credit card bills start to hit the mat, we have all spent too long together and with the in laws… Its not surprising I suppose. But as much as its never nice to see a relationship fail, we are here to help if you need us.
How we can help depends a lot on where you are in the process of getting divorced.
Mortgage Capacity letters
If you have already gone through divorce you may want to skip this section as you probably know all about these. For the benefit of those still going through the divorce process or just starting, one of the steps is to obtain a Mortgage capacity letter or report.
These letters are written for the benefit of the court to confirm your mortgage capacity. This basically means how much you would be able to obtain. They are used by the courts to help determine how much each person will get from the marital assets. You can find more information on our mortgage capacity letters here.
Getting a mortgage whilst going through divorce
It is probably a little harder to get a mortgage whilst going through divorce than after it. Although it does depend on the details.
The things we need to consider are:
Is your name on a current mortgage, or more importantly will it be when the new mortgage completes? This can result in extra stamp duty costs. It can also mean you will be liable for 2 mortgage for a period in which case this will affect how much you can obtain.
Lenders do not like lending in these circumstances for various reasons. That being said however, it can be done but there is more work involved, probably higher costs and only really works if both mortgages are affordable to you.
Getting a Mortgage after divorce
This tends to be easier. Everything has gone through. We know what maintenance will be paid (if any), we know how much deposit there will be, if there is any debt built up as part of the divorce proceedings and in general we have a much clearer picture of what your circumstances will be.
At this point, answering the question of whether you can get a mortgage with divorce becomes a lot easier to answer. This is where things start to become a lot more normal.
However there are still pitfalls that we can help to avoid:
- Your name – have you changed your name?
- If you have changed your name, have you updated your ID?
- Have you recently changed your address?
- Have you picked up any bad credit because of the divorce?
Its not uncommon for people to change their name following a divorce. But the ID is not always updated as quickly as it could be… This is not a deal breaker, we can look to use letters from the courts confirming the divorce.
If you have changed your address following the divorce, a short time in a new address can be a problem. One because you may not be registered as living then on the credit reports, this can affect how your application is scored. You may not have any ID or documents showing you live there – again, not necessarily a deal breaker. We have experience in helping to overcome this.
Lastly we do sometimes see people pick up bad credit during divorce. The usual reason for this is because the ex partner intentionally did not pay certain debts that were held in joint names in order to be spiteful. Not as uncommon as you may think! Again, something we have experience in.
Summary
Regardless of the stage you are at during the divorce process, it is always worth a conversation. Even if you are not in a position to buy yet or we are not able to help you, we can probably help to answer some questions and let you know where you need to be in order to get what you want down the line.
We have been helping people obtain mortgages after divorce for well over a decade. Infact one of my very first customers (who I still help even today) was a lady with bad credit after divorce! 11-12 years on and we still do her mortgages.