RELATIONSHIP SPLIT FINANCE: Refinancing Home Loan After Divorce
Looking for a trusted mortgage broker to help you on your journey?
Transcript of: Relationship Split Finance
Relationship Split Finance is when you and your ex have split up, and after an agreement or court order has been made, the person keeping the property requires the title and home loan to be refinanced into their name.
What happens to our home loan after separation?
Relationship breakdown is something no one expects to happen, and for some of us, it can be the most traumatic period our lives. If the emotional things encountered during the relationship split doesn’t get to you, it can often come at a time when it comes to setting out who gets what.
For the person who will be getting the property, a common worry is wondering if they will get approved for the home loan or not.
At the end of the day, it’s the family home and a lot of these people know that they may not have a chance to get back into the market if they are forced to sell the property now.
Today I’m going to talk about home loan things people don’t know about when it comes to this stuff. Before I do that, I’d like to reach out to you if you are in this situation. You’re best to seek out a good mortgage broker like the team here at Will Bell Mortgage Broker.
Fair warning though. If you’re coming to us, you need to be respectful.
Unfortunately, some relationship splits can be messy, and people carry a lot of emotional baggage. I’ve been yelled at, threatened, and abused before by emotionally unstable people and most of those times it’s been from people coming out of a messy divorce or relationship split.
Factors Affecting Borrowing Capacity After Split-Up
What quite often happens is that people will go to their banks and if the home loan is declined then quite often they just think that the house has to be sold.
A lot of the time these home loan applications are declined because they don’t show enough income. People don’t realise that different lenders assess income independently and the differences from lender to lender can vary greatly.
I’ve looked back over the home loans I’ve done for relationship split finance where the solution may have been declined by many other lenders. I have come up with 3 major things. This could make the difference of hundreds of thousands in borrowing power.
1. Overtime and allowances
There are probably a hundred different lending policy interpretations of these sorts of income.
For example, some lenders won’t take any overtime income if you have only been in your job for 6 months whilst other lenders are fine with it. Other lenders may only want to take a portion of the overtime you’ve earnt to be safe. This can mean the difference between getting the loan or not.
There are many situations where the lender may not be able to use child support income, the main one being is that if the child is over the age of 12.
If you are on the other side and you are the one paying the child support, the lender can also double dip. That’s because they use the child support as an expense but also assume that you have expenses for the kids, and they assume that they’re living with you full time. It makes no sense, but welcome to the world of banking.
Most lenders won’t take this income for kids over 12 or 13 years old, however there are lenders out there that will take this income.
**There are many other intricacies in going for a home loan, but I won’t bore you with all of them.
Light on finance post relationship split
Before I leave you, I want to give you some advice based on my experience in dealing with these sorts of situations over a long-time frame.
Two things you should do in this situation:
1. Don’t panic. These things always take time.
If you feel rushed, you will put yourself in situations where you make bad decisions, and from my experience, these situations can often drag out anyway. You should just focus on doing the right things.
2. Engage a mortgage broker as early as possible.
The earlier you get to them, the more time you will have to prepare for the future.
I hope this has shone a light on finance for a relationship split. If you liked this video or found it useful, please like and subscribe. If you need help, you know where to find us.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.