Separating from a partner is unquestionably difficult, and more often than not, it is made even harder by financial concerns. However, amidst all the complexities, you need to keep practical matters in focus. If shared property and a mortgage are involved, then one of these practical matters is your mortgage payments. So, getting trusted independent legal and financial advice should be a top priority.
Who Pays the Mortgage?
In New Zealand, when a marriage, civil union or de facto relationship ends, the division of property is governed by the Property (Relationships) Act (PRA). Couples have equal rights to the family home even if only one partner has their name on the title of the property; the house they live in is considered joint property.
This means that if one party moves out of the house, both remain liable for missed payments if the loan is in Joint names. In simple terms, both partners continue to be legally responsible for making sure all mortgage payments are made on time.
The Importance of Continued Mortgage Payments
• Credit Rating Protection: Failure to pay on time can lead to late penalties from the bank and negatively impact credit ratings.
At Global Finance, we understand that keeping up with mortgage payments during separation can be particularly challenging. So, we recommend contacting the bank early if there are going to be any repayment issues and engaging one of our mortgage advisors to help you to plan for the future. A skilled mortgage advisor can be a valuable asset during times of transition, offering financial expertise and unbiased guidance.
Explore Your Options
Various options are available when it comes to dividing property and resolving mortgage issues. Whether you chose to buy out your partner, sell the property and split the proceeds, or continue with joint ownership, our team can help you effectively weigh these options from a financial standpoint. We can outline the pros and cons and help you understand the implications of each option so you can make informed decisions with both your short-term and long-term goals in mind.
Consulting a mortgage advisor early in the separation process will help you understand whether you are able to buy your partner out, or what you can afford to purchase should you choose to sell the house. Some banks will let you take a brief mortgage holiday for a month or two while you sort out a separation agreement and we may be instrumental in negotiating this for you.
Buying Out Your Partner
Staying in the family home can offer stability. Our mortgage advisers can help you:
• An indication to the equity available in the house.
• Explore refinancing your mortgage to access funds for the buyout.
• Find out, your ability to repay the proposed mortgage in the new scenario.
• Collaborate with lenders and your legal professionals for a smooth transition of ownership.
Sell and Split
Selling the property and dividing the profits can provide a fresh start. If your mortgage is small and your property has increased in value over the years, you may be in a relatively good financial position, with a solid deposit in hand for your next property purchase. We can work with you to:
• Determine the potential profits.
• Assess approximate costs associated with the mortgage and likely mortgage repayment.
Joint Ownership
Sometimes, holding onto the property with your ex-partner temporarily might be a practical option. For example, if you have a large mortgage and your property has declined in value, you may not take much from the sale. It may make more sense, therefore, to keep the property for a bit longer, either renting it to one partner or to other individuals. Our team can assist you with establishing clear boundaries as this approach requires:
• A written agreement specifying mortgage payment responsibilities and a clear timeline for property sale.
• Expert advice to ensure a smooth co-ownership arrangement.
Expert Advice Matters
At Global Finance, we fully appreciate that each couple’s situation is unique; there is no one-size-fits-all solution. Our role is to ensure you understand your circumstances and receive the best possible financial advice to guide you through this challenging period.
The Role of a Trusted Mortgage Broker
Budget Assessment: We will review your budget, factoring in your income, expenses and other costs like rates and maintenance. This will help you make informed decisions about your financial commitments and what mortgage payments you can comfortably manage on a single income.
Understanding Your Mortgage Structure: Our advisors will work with you to make sure you understand both your current and future mortgage structures. We can provide clarity on mortgage terms, ensuring you’re aware of all potential implications.
The value of well-informed decisions
With our support, you can make well-informed decisions to safeguard your financial well-being and future stability. Partnering with a mortgage advisor ensures you have a reliable source of independent advice, unaffected by emotion.
If you or your friend or relative are facing the challenges of managing your mortgage after a separation or divorce, contact Global Finance for a no-obligation, free conversation. Our team is here to help you understand your options during this difficult transitional period. We appreciate the sensitive nature of these discussions and approach every conversation with sensitivity, confidentiality and respect. Call us on 09 255 5500 or write to us on info@globalfinance.co.nz
The information and articles published are true to the best of the Global Finance Services Ltd knowledge. Since the information provided in this blog is of general nature and is not intended to be personalized financial advice. We encourage you to seek Financial advice which is personalized depending on your needs, goals, and circumstances before making any financial decision. No person or persons who rely directly or indirectly upon information contained in this article may hold Global Financial Services Ltd or its employees liable.