Around 100,000 couples get divorced in England and Wales each year, and a significant percentage of those who separate share a mortgage. This can create legal, technical and affordability issues when someone seeks to buy out their partner or purchase a new home on a single income.
Emma Jones, managing director of Runcorn-based WhenTheBankSaysNo.co.uk, said many of the mortgage-related and homeownership issues resulting from a divorce could be overcome. She highlighted practical actions people can take, as well as the importance of knowing which lenders are more inclined to assess a person's circumstances manually and in detail.
Affordability drops overnight
Jones said: “One of the biggest problems after a break-up is that a person’s affordability drops overnight. Lenders will immediately assess you based on a single income, so a mortgage that worked for two often doesn't stretch to one, even if the applicant's own earnings haven't changed.”
She added: “But there are specialist lenders out there that can factor in things like maintenance, child support, or other income streams that high street lenders typically ignore. This can prove invaluable when trying to buy on your own.”
Jones also warned about “financial association”, where late payments or defaults by one former partner can adversely affect the other's credit score. She advised people to apply for a formal Notice of Disassociation with the credit agencies.
“To avoid situations like this, people should apply for a formal Notice of Disassociation with the credit agencies, which can break that link with the ex and whatever they’re doing with their finances. It's a quick, often-overlooked fix that most good brokers will flag immediately,” she said.
Deposit and timing challenges
Another issue is finding a deposit for a new home. When the family home is sold and the legal costs of divorce and estate agency fees are factored in, what’s left for a deposit can leave affordability razor-thin. Jones said specialist brokers can structure deals using equity from the sale itself or explore Joint Borrower Sole Proprietor options with a family member to bridge the gap.
She also said the timing of a mortgage application is key. Applying before a divorce or financial settlement is legally finalised makes some lenders nervous, but others will still consider an application mid-divorce process, so people are not stuck waiting months for the paperwork to catch up.
“Applying for a mortgage before a divorce or financial settlement is legally finalised makes some lenders nervous, as they want clarity on who's liable for what before lending. However, there are lenders that still consider an application mid-divorce process, so people aren't stuck waiting months for the paperwork to catch up,” Jones explained.
Case study: Jordan Lowrie
Jordan Lowrie, a client of WhenTheBankSaysNo.co.uk, recently separated from his wife after their marriage broke down, which he described as “an incredibly tough time”. He owned a house with his wife that he loved and wanted to stay in, but the monthly mortgage payments were going to be around £1,500, which was not affordable on his own.
Lowrie said: “I spoke to a few different lenders, but I felt like I was getting nowhere. Some wouldn't really give me the time of day, while others were offering interest rates of around 8%, which simply wasn't realistic. At that point, I genuinely felt like I had run out of options. It was looking more and more likely that I'd have to sell the house and move back in with my family, which wasn't something I wanted to do. Thankfully, my broker took the time to understand my circumstances instead of just looking at the numbers and I was able to sell my previous home and move into a new one much quicker than I expected.”
“Going through the breakdown of a marriage while selling one home and buying another in such a short space of time was incredibly stressful. To come out the other side with a mortgage that I was genuinely happy with, at a monthly payment I could comfortably afford, was a huge weight off my shoulders,” he added.
Jones said traditional high street banks tend to apply rigid, one-size-fits-all affordability rules, whereas more specialist lenders take a manual, more human view of income, credit history and circumstances.
Final advice
Her last piece of advice was that, even during a messy breakup, people should try as best they can not to miss any loan or credit agreements. “Break-ups and divorces can be an emotional rollercoaster, but both parties need to do their best to ensure all loan payments and credit agreements are being met. One late payment or default can tank a credit score right when the person needs it to be as strong as possible,” she said.
