Q&A Joint mortgage, negative equity, no savings – how can we divorce?

Q: My wife and I both want a divorce. However, due to the financial crisis we both lost jobs and subsequently got into debt with the mortgage lender. Now, with house prices starting to drop, we find ourselves in a negative equity situation. On top of that, my wife wants to stay in the house, which I cannot see is possible if we divorce. And as we have a joint mortgage, what will happen to that?

A: As you own the house jointly it will be considered a matrimonial asset and will need to be dealt with as part of the financial settlement if you divorce. How your mortgage is affected will depend on the terms of the financial settlement and any court order made.Unless, and until, you negotiate a clean financial break to sever all future financial ties, you and your wife will be jointly and severally liable for the mortgage repayments, either until the mortgage is repaid or it is transferred into the sole name of one of you.

In a divorce, the marital home is generally dealt with in one of three ways. Either it will be sold and the mortgage will be repaid in full to the lender, or one party will buy the other out following an agreed valuation and a new sole name mortgage will be established, or one party will keep the house as part of an agreed settlement and the property and mortgage will be transferred to that party. All of this can be arranged by your solicitor as part of the divorce process.

If the property is in negative equity, then the options are more limited, and a clean break settlement may be more difficult. However, an experienced divorce solicitor can usually find a creative solution to the problem that will facilitate financial freedom for their client going forwards.

This question has been answered by Deon Hayward, a Solicitor with GHP Legal. 

If you would like to speak to someone about this or any other legal matter, book an appointment by visiting GHP Legal or contacting one of our offices:

Wrexham Office

Email: wrexham@ghplegal.com

Phone: 01978 291456

Llangollen Office:

Email: llangollen@ghplegal.com

Phone: 01978 860313

Oswestry Office:

Email: oswestry@ghplegal.com

Phone: 01691 659194

Deon Hayward

Deon Hayward

Solicitor

Deon Hayward is a Solicitor based in our Oswestry office.