A couple should always advise their mortgage lender if they have decided to divorce, according to Jeff Knight, director of propositions at Castle Trust.
In fact, Mr Knight says that legally if a couple are joint mortgagors they both remain jointly and severally responsible for the mortgage debt unless they agree otherwise with the mortgage lender and the agreement is properly documented.
He says: “This is irrespective of which partner remains in the marital home.”
Ronan Marrion, mortgage adviser at Cornwall-based Worldwide Financial Planning, and Tom Riley, head of product at Nationwide, say what a couple need to tell the lender depends upon the terms of the divorce and their own personal circumstances.
Mr Marrion says: “It may be that neither one of the married couple can afford to take on the mortgage in their own right so they agree to keep the existing mortgage in place until they sell.
“On the other hand maybe one person would like to buy the other out or remove themselves from the mortgage/title deeds of the property. At this stage it is probably best to speak with a financial adviser to assess what options may be available with other lenders.”
If one of the couple wants to be removed from the mortgage policy, Mr Riley says they will need to follow the lender’s change of borrower or internal remortgage process, depending on whether additional borrowing is required by the remaining resident to buy out the other partner.
Information about the individual who wants to take the mortgage on in their sole name will be requested by the lender to make sure they comply with lending policy and underwriting criteria such as credit scoring, payment history and affordability, Mr Riley adds.
“If they choose to sell the property, then once the mortgage is repaid [the lender] ceases to be involved.”
