The end of a relationship – it’s a stressful and emotionally-charged time. And when emotions are running high, the last thing anyone needs, is financial pressure on top.
If you and your partner share a mortgage and are unsure about how to manage it through the separation, we welcome you to read on for some key things to consider.
One of the first things to decide is whether or not to keep your family home, which of course entirely depends on your circumstances.
Generally speaking, if you want to start afresh or can’t come to an agreement about who keeps the house, selling may make sense both financially and emotionally. On the other hand, you might want to keep your house, or hold onto it for the time being and sell it down the line.
Whatever you choose, make sure you know what these options entail. Which brings us to the next point...
Leaning towards keeping your property? There are important details to consider first: who’s going to live in the house? Would you or your partner be able to afford your mortgage repayments on a single income? And if you chose to split the property, how much would you each get as a share?
Based on your situation, you can either decide to keep paying the loan together or go your separate ways. If it’s the latter, refinancing may be an option: for example, either yourself or your partner could refinance the home loan and buy out the other’s share of the property.
When going through a separation, it’s easy to feel overwhelmed with big decisions, let alone financial commitments. And that’s when you might be tempted to pause your mortgage payments for a while.
Before you do, please take our advice: a payment holiday may not be a good idea – and certainly is not a good long-term solution. While it could lighten the load in the short term, stopping payments can impact your credit score in the long run; plus, the interest will keep incurring on the loan, increasing the mortgage term…
Finding it hard to meet your mortgage schedule or to decide the best way forward for your mortgage? Please talk to us. It may be a difficult thing to do, but being honest and proactive about your financial situation – whatever this may be – is often the first step to being in a better position. There’s a lot of help out there; sometimes you just need to raise your hand.
It’s a brand new chapter of your life, so it’s important to get some good advice about what next and what’s right for you. At RESIMAC, our Lending Specialists and the advisers we work with are expert at helping Kiwis navigate the detail involved in managing a mortgage through a separation. We welcome you to get in touch.
The content in this article is not intended as personal financial or legal advice. Managing a mortgage through a separation can be a complex undertaking, and we recommend that you seek professional advice for your individual circumstances.
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