Divorce can be heartbreaking enough for a couple, let alone for a family. With couples often having to sell their family home, the market is evolving to try and meet the needs of families forced to leave their homes after a divorce. Lenders are said to be devising a new ‘divorce’ mortgage product, which could be on the market as early as this year.
The proposed mortgage is designed to let a person borrow enough money to buy out their ex-partner’s share in the family home for a certain period of time. This would allow one half of the couple to stay in the home, making it a more affordable and less disruptive option for families with children.
Often, divorcing partners are required to provide around a 25% deposit in order to buy out their ex and remain in their family home (because the original mortgage was likely obtained on the basis of a double income household), but the divorce mortgage aims to make this an easier and more affordable transition.
According to research from Nationwide, almost three in ten (approximately 28% of) divorcing couples end up having to sell their family home because one partner cannot afford the mortgage by themselves. The current circumstances can even penalise “friendly” divorces where the couples avoid court, because many lenders require court ordered maintenance payments to help satisfy lending requirements for mortgages. Some lenders will accept private maintenance arrangements, but typically require at least six months’ proof of regular payments – often too big a requirement for those needing a speedier settlement.
Although this mortgage doesn’t yet exist, it shows lenders are evolving their mortgage products to meet the changing needs of their customers. With divorce rates remaining at high levels, this seems a good time to bring out a product that could potentially help families with children make the divorce process less painful and disruptive overall.