New ‘divorce mortgage’ may help buy time for divorcing couples.
It has been reported that lenders are seeking to devise a new ‘divorce mortgage’ which could be offered as soon as the end of this year. The proposed plan would allow a divorcee to borrow enough money to buy out their former partner over a set period of time.
According to some experts, stricter affordability checks introduced by the banks over the past couple of years have made retaining the family home even more difficult after separation. It is typically the most significant asset that parties need to deal with and people often have no choice but to sell their property.
Under the proposed plans, a divorcee would be able to borrow a lump sum to buy out their former spouse, as well as a further amount that would be deposited in a savings account and used to pay the interest on the loan over a set term. At the end of the term, the borrower can then either take on the full mortgage themselves or sell the property and repay the loan.
Whilst not a long term solution, the plans could have the benefit of buying time on separation (as the term could potentially be for as long as whilst the children remain in education) which would be beneficial for both parents and children. This could lead to a marked shift in the way people are able to deal with their property on separation.
If you are going through a separation and wish to speak to somebody about the options to you in respect of your property and other assets, please contact Anna Scales, Solicitor, Family.
Published: 14 Jun 2016