How to Split the Family Home in Divorce

Many divorcing couples own a family home together and one of the most common questions I get asked is – what happens to our family home?

Deciding on how to deal with the family home can be the most difficult part of ending your marriage. Not only is it the biggest asset you’ve got but it’s also the one you feel most sentimental about. The situation becomes even more complicated when you have young children to think about.

It’s a difficult decision but it isn’t an impossible one. There are lots of options to choose from and if you can to work together towards a friendly divorce, you can find one that works for you. All the law requires is that you provide a suitable home for your young children, other than that, you are free to come up with your own unique solutions.

What Information You Need

• Financial Information – What will happen to the family home will depend on the full financial position of both partners. For example, if you have another property which is of similar value will give you a different outcome to a situation where there are no other assets. So, before you make any decisions about the family home, you need to get together information about both of your finances including debts. Make a spreadsheet of all the information so you can see a snapshot of the information when discussing how to have a fair split.
• Valuations – You will also need to know the valuation of your house and the other assets. An informal valuation from an estate agent will be enough. There is no need to pay for a valuation at this stage. If you can’t agree on an estate agent, one of you should pick 3 of your choice and the other can pick the one that will provide the valuation.
• Recent Mortgage Statement –Look at your most recent mortgage statement and check the balance of your mortgage as well any early redemption penalties. Many people assume there is no redemption penalty – don’t make that mistake.

Your Options

Once you have the above information you can see the full financial picture which will make it easier to see what option works.

If you are coming to an amicable agreement – you can decide what you feel is suitable in your situation – as long as the agreement is fair to both.

Here are some of the options you can think about:

• SELL NOW & SPLIT THE MONEY- If there’s enough money in the house, you could sell the family home and split the money between you. As long as, your agreement is fair, the money doesn’t have to be split equally. For example, the person looking after the children might need more money to buy a bigger house or the person earning a lower salary might need a larger deposit.
• Buy Out – If you want to hold on to the property, you can buy the other out of their share. The house and mortgage can be transferred into your name and the other person can be released from the mortgage. Before you enter into such an agreement, check that you can afford the mortgage payments and that your mortgage company will let you take on the mortgage on your own. Also, work out where you will get the money to buy the other person out.
• OUTRIGHT TRANSFER TO ONE PERSON – If there is not enough money in the ‘pot’ you can transfer the house into the name of one person. This is common when there are young children and the person with their care needs the house as security for the children. In this situation, the person with the full-time care of the children is usually unable to afford to buy the other out and there isn’t enough equity in the house so selling it does not benefit either party. Before you decide on this option check the position of the mortgage as above.
• SELL LATER – Another way of holding on to the property is to delay the sale until an agreed date. For example, one person will live in the house until they remarry or until the youngest child turns 18, at which point the house can be sold and the money split between you. The split of money would need to be agreed at the time of making the agreement not when you sell the property. The advantage of this is that the financially weaker party can stay in the house and the other person can still get their share albeit at a later date (rather than just giving the house by an outright transfer). The disadvantage is that you may have to wait a long time before you get your share of the property.

These are just some of the options to consider. There are many other ways that an agreement can be reached. Whatever you decide, make sure you get it drawn up in a legally binding consent order and approved by the court so that you are both protected. A consent order is drawn up in very specific legal terms and I can prepare this document for you as well the forms that you will need to complete before you send it to court.

POINTS TO CONSIDER

Mortgage

• If you want to transfer the property to one person –get confirmation from the mortgage company that they will release the other person from the mortgage. If a property is held in joint names, or in the sole name of one party, the mortgagor does not have to agree to the mortgage being transferred into the other party’s sole name if the property is to be transferred to them.
• Will the mortgage company let one person take on the mortgage? You may want to keep the family house, but will you be able to have the mortgage transferred into your name?
• Remember if you transfer the house into your ex’s name but stay on the mortgage, you are still liable for the mortgage so think about this very carefully.
• Get advice from a financial advisor /mortgage advisor about the availability of mortgages and loans to purchase a property.

COSTS

• If you want to sell the property find out how much will it cost you to sell it (estate agent fees, conveyancing fee, etc).Also think about cost of buying a new place such as stamp duty, removal & storage costs.

Remember – you can’t really look at the family home on its own, you must take into account the entire financial position of both parties before you can come to a truly fair settlement.

This is something I help my clients with every day. My approach is to focus their minds and make a watertight settlement agreement that works for them both. I will take you through the process, step by step so you can make a decision by communicating with each other without emotions getting in the way. My aim is to get you through your divorce peacefully, without firing you up to go to court and spending all your money on legal fees. It is possible to have an amicable agreement – one that does not cost the earth. Give me a call on 07967 012 006 for a friendly chat about your options. You can also email: sl@divorceconsultants.co.uk   or complete an Enquiry Form Below

This article is for general information purposes only and does not constitute legal advice.

“Hi Sonia – Thank you once again for taking this on and being so professional and helpful. ” J.J

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