How to manage a home and mortgage after a separation

Sadly, romantic relationships sometimes come to an end. If the couple own a home together and are joint signatories on a mortgage, what happens to the property and the loan?

From a legal perspective, the property is just another asset, which means it needs to be divided in some way (as part of the larger division of assets). Options include:

• Selling the home and splitting the proceeds.
• Continuing to jointly own the home. In that scenario, the two parties need to decide how the home is to be used. For example, it might be turned into a rental property. Or one party might continue living in the home and pay rent to the other party.
• Awarding the home to one party. The other party might receive other assets in return.

If the couple sold the home, it’s likely the mortgage would be cleared and the couple would be left with some surplus cash. This money would then become another asset to be divided.

If the couple retained the home, both parties would be jointly responsible for the ongoing mortgage repayments. That may cause tension if one party paid in full and on time but the other didn’t, because, from the lender’s perspective, both parties would be equally liable for the mortgage falling into arrears and potentially being foreclosed. To avoid that problem, it may be a good idea to reach a legal agreement on each party’s repayment responsibilities.

Why you should get professional advice

To protect yourself, it’s best to get both legal and financial advice.

A lawyer will advise you about your rights and responsibilities regarding your property and mortgage.

A financial professional will advise you on the implications of selling the property and discharging the mortgage, or retaining the property and mortgage under different scenarios.