Separation - how have others financially afforded a new house
We are just in process of separating. Very early days. Still stuck under same roof due to covid.
We are both reasonable earners and together we have a nice house. I would like to be able for one of us to move out. I don't know how we can afford to do this though? Anyone with any experience or advice? Simply sell? Or buy out? Where does the party who buy's out get the money?? I feel quite naive. How does anyone who sells have enough deposit for each of you to get back on ladder??
You don’t mention whether there are children involved so I’m going to assume there are none.
There are no easy answers. At the end of the day it gets down to what you can afford. I have faced this situation twice. The first occasion, I couldn’t afford to buy her half of the house so we sold the house, went our seperate ways and I share rented for five years.
The next time ( ten years later, new partner), I could afford to borrow from the same bank that already held the mortgage, and paid her out and then I stayed in the house. There were fees (stamp duty and legal) on this transaction that added about five thousand dollars to the cost. I then advertised for a lodger which helped defray the extra payments on the new mortgage cost. I could not have afforded this plan without the lodger paying $200 weekly.
You simply have to sit down and carefully work out what is possible from a financial perspective. Depending on your age, career prospects, location of property etc, it sometimes cleaner to sell up, split the cash and start again. I say this because staying in a family home after a divorce can be lonely and remind you of bad things.
I think that you are putting the cart before the horse here!
Before you start thinking about selling the house you need to get a binding "property settlement" in place. Most people do this with the help of a lawyer that works in family law. There are other avenues, but you first need to get some idea of how the marital property (house, savings, super, cars, investments, etc...) will be divided.
This division of property is not a simple matter, a number of factors will determine how the marital property is divided. The courts and lawyers will first determine the "property pool" and then look at who contributed financial and non-financial (homemaker and/or parenting) to the acquisition of the property pool. In addition the courts will look at the future needs of both you and your spouse and the children if you have any. It is not a simple process.
The point is; you cannot consider the sale of the house until you know how the marital property will be divided. It could turn out that you are entitled to keep the house, particularly if you are caring for children. On the other hand, it could turn out that the house has to be sold and the proceeds divided. A this point you might have the option to buy out your partner; you will have to borrow from family or the bank. The amount you will need to borrow will depend on how the property is divided.
Some people mistakenly think that property is divided 50/50 by default in a divorce; particularly in a long marriage. That is not true. Every property settlement is unique.
My best advice is to talk to a family law lawyer before you consider what will happen to the house. Many lawyers offer a free one hour consultation to get your business.
thanks - we have 2 kids 10 and 12 - so really bad timing age wise....I don't want this to affect them more than necessary.
to respond to some of the other points made by others...i have done up an assets spreadsheet - so super, savings, house, cars, outgoings etc. I have an appointment with a lawyer tomorrow. We both work full time - always have and my understanding (which isn't too bad) of the law...and our situation is...that it pretty much would be 50/50...sell it or buy the other out for whatever asset we are talking about. I just fail to see how people manage to start again...deposits for houses etc.
I don't have any family to borrow from. do banks even do 100%mortgages anymore 😞
So glad you’re seeing a solicitor tomorrow. Great forward step.
As Mr Paul has already explained, all assets in the marriage pool will be divided, not just the house (although the house is usually the highest value asset).
From the laws point of view they will prioritise the welfare of the children and the primary care giver. As far as I’m aware the days of 100% loan valuations are long gone, so you may have to be prepared to rent.
Renting does offer some freedom and flexibility and will give you time to really consider your future options. I wouldn’t make any big decisions for at least 12 months post divorce. It takes a while for the emotions to settle.
Good luck tomorrow!
To my understanding the court will not displace you or your children if you are the primary care giver. You will most likely be allowed to stay in the house until the children reach 18.
The courts will always put the welfare of the children first. This arrangement will be a part of your property settlement agreement.
I hope this helps!