Whether you’re married, in a civil union partnership, or a de facto relationship, when your relationship ends by divorce, separation, or death you are affected by the Property (Relationships) Act 1976 (the PRA). This act aims to provide a just division of the relationship property, including the family home and other jointly-owned property. Find out how the property of married couples, civil union couples and couples who have lived in a de-facto relationship is divided up in the case of divorce, separation or death.

One partner keeps the family home

When both partners agree that one can remain in the family home while the other moves out and either buys or rents a new property, the remaining partner will need to buy out the other’s share in the property.

This is often the best solution when there are children involved, and both partners agree that for the sake of stability in an unsettling time, the children remain in the family home with one of the partners.

But as much as this decision makes perfect sense from an emotional point of view, the remaining partner needs to be in a financial position to support the property’s ongoing mortgage repayments on their own.  

The mortgage will be refinanced into the remaining partner’s name and that person will be solely responsible for the repayment of the mortgage. The partner being bought out is able to cash out their share of the family home or use it towards buying another property. 

When refinancing to a single owner, the lender will assess the application to determine whether the remaining partner meets its serviceability requirements. This process includes confirmation of income and employment as well as a credit check. 

The family home is sold and the profits are shared

If both parties are unable to come to an agreement, the family home will need to be sold and the sale price less any mortgage costs is then split between the couple. It’s important to note that if the home is jointly owned, it cannot be listed for sale or sold without both partners’ agreement.

The home is jointly owned

Co-owning the family home after a divorce or separation allows both partners access to the home for a set period of time. This situation only works if both parties are in agreement and an amicable settlement can be reached.

To safeguard against any disputes, both parties should plan and agree the repayment terms of the joint loan – how much will each continue to contribute, which bank account will be used to pay the mortgage, and how long will both parties continue to be responsible for the mortgage repayments.

The best financial path for you

Ending a relationship is an emotional and traumatic experience, and the process of separating lives, property and finance is understandably challenging. If you are going through a separation or divorce, seek sound legal advice from your lawyer about dividing relationship property. 

However, get in touch with a Mortgage Express branded mortgage adviser to discuss refinancing a mortgage to cover the cost of buying out a partner or refinancing a new home.