WHO PAYS THE MORTGAGE AFTER SEPARATION?

Following separation, you may find yourself in one of the following predicaments:

(a) You remain living in the family home that has a mortgage over it, whilst your partner has moved out.

(b) You have moved out of the family home and your partner remains in the home.

The need to negotiate the mortgage repayments is often one of the most urgent financial considerations upon separation, along with how to continue paying for any other real property.

If both parties are joint mortgage holders, both remain legally responsible for making the mortgage repayments. Therefore, the person who leaves the home is still responsible for home loan repayments, even if they are now paying for their own separate housing expenses.

As joint mortgage holders, if one party ceases making mortgage repayments and arrears accrue, your financial institution will pursue both of you, which may negatively impact your credit ratings.

To avoid messy and expensive litigation regarding this matter, you might agree to maintain the usual mortgage payment arrangements until a final property settlement is reached. By continuing to make repayments, it may enhance your property entitlements when it comes to final negotiations, where the repayments are seen as post-separation contributions. Another common arrangement, where both parties earn an income, is for the party remaining in the home to pay the mortgage, and the person who has left the home to pay rent for alternate accommodation.

Alternatively, if your partner decides not to make mortgage repayments and you are struggling to meet the demand, you should seek assistance from an experienced family lawyer and your financial adviser. The following options may be available to you:
- You may ask your financial institution to defer payments until a final property settlement is achieved, bringing about a short-term reprieve for you.
- You and your partner can agree to sell the property, which will release you both from mortgage obligation. The balance of the proceeds of the sale can be held in trust until an agreement is reached in respect to a final property settlement.
- In some circumstances, you may be able to obtain a court order for spousal maintenance, specifically asking for your partner to contribute to the mortgage repayments.

More on Mortgage Repayments and Post-Separation Contributions

A common concern for the person making the mortgage repayments post-separation is whether that party will be 'reimbursed' for the repayments, or whether the final property settlement amount will be adjusted for the amount paid for separation to finalisation of the matter. Unfortunately, there is not a clear-cut answer. If the matter reaches litigation and is decided by the Court, the Court will consider a range of factors, and in some cases, post-separation payments may not result in an adjustment.

Remember, each separation is different, and it is essential to consult with a family lawyer who can provide guidance and advice tailored to your unique circumstances. 

 

HOW CAN OMNIA LEGAL ASSIST YOU? 

Prior to making any decisions or significant changes to your living arrangements and finances, contact us today for an obligation-free complimentary phone consultation with our experienced family law team. Call (07) 5415 0248 or email info@omnialegal.com.au.