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What does ‘Mortgage Freedom’ Day mean for homeowners who divorce?

Without a doubt, your house is likely to be the most expensive thing that you ever purchase. There is some truth to the idea that two can live as cheaply as one – but what happens when you divorce?

In light of Mortgage Freedom Day, we are looking at mortgages and living arrangements post-divorce. Mortgage Freedom Day is the idea that, by this day, you have earned enough to pay your mortgage in full for this year (if you hadn’t bought anything else like food or paid any other bills, that is.)

Obviously, different areas of the country differ; if you are in London, for instance, you’ve got another two months to wait. One thing which doesn’t change is that owners are better off than renters as Rental Freedom Day is, on average, more than two weeks away with Londoners having to wait even longer.

In a divorce where this is more than enough money to go around, both parties will ideally be able to make decisions that leave them both suitably housed mortgage-free (or with minimum mortgage) whether this be in the former matrimonial home or elsewhere. However, sadly, there is rarely enough money for this and any decisions about reaching a financial settlement must be made on a number of factors, some of which relate to housing.

There are lots of things the Court will consider about housing, including any children and where they will live, each party’s mortgage capacity and how much deposit each person will need. Both partners may need to make decisions about where they live and the standard of living. If there is enough money to buy a three bed semi in the suburbs, now is not the time to be hoping for Buckingham Palace!

The Court has a wide range of options and can order that the family home needs to be sold. They can, however in some instances, defer the sale of this to a later date if this is needed.

Another option is whether or not one partner can afford to keep the family home and give the other partner enough money to make up for it. If so, this is sometimes the most straight forward way to reach a settlement. It is sometimes more attractive in circumstances where it prevents the children of the marriage having to move from their family home. Although sadly this is not always realistic and a lot of the time the house will need to be sold.

In any event, the division of assets during a separation can be very complicated and particularly so when there is a house to be divided. It is best to have an experienced divorce solicitor to guide you through this and get you the best deal possible.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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