Break-up mortgage borrowing on the increase

The property services provider found 5 per cent of borrowers remortgaging in May did so due to a divorce or separation, compared with 3 per cent in May 2017 and 1 per cent in May 2016.

Included in these figures were borrowers refinancing to raise funds to cover divorce settlements and those wishing to remove ex-partners from their mortgage.

Nick Chadbourne, chief executive at Legal Marketing Services, said while most borrowers remortgage to switch deals and save money, remortgaging due to divorce or to pay off debts has been on the increase.

He said: "As divorce becomes simpler through innovations such as the government’s new online divorce system, so too is remortgaging.

"This may well be contributing to the use of remortgaging as a vehicle to raise funds for divorce settlements."

Mr Chadbourne said in almost all cases customers are looking for an efficient process that delivers against both speed and value.

He said: "A fees-assisted remortgage is the most appropriate vehicle, developed and refined for this process - it offers both customer and lenders great value and an efficient legal platform to make the switch."

John Joseph, director at John Joseph Financial Services Limited, said the increase in remortgages due to a divorce can also be attributed to couples increasingly wanting to ensure family stability during a split.

Mr Joseph said it is now common for one partner to remain in the family home, perhaps to keep children in their school catchment area and minimise any disruption to family life, and a remortgage is therefore required to buy out the other partner.

Other reasons for remortgaging also increased this year, with the proportion of borrowers remortgaging to pay off debt rising from 16 per cent in May, compared to 14 per cent in the same month a year earlier, and 26 per cent of borrowers remortgaging to fund home improvements, up from 24 per cent in 2017.

rachel.addison@ft.com