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Separating? Understand your home loan options

Nicole Kidman and Keith Urban are making headlines, having reportedly called time on their 19-year marriage. If you’re also facing a relationship break-up, it’s important to know where you stand on practical issues, such as how to hold onto the family home, if that’s your goal.

While Keith and Nicole are likely to have a multi-million dollar property portfolio to divvy up, most Australians have just one family home.

That doesn’t necessarily make matters less complicated, especially as our home tends to be the jewel in the crown of household assets.

Some couples choose to sell their home, pay off the mortgage and go their separate ways.

However, if you want to hold onto the family home, the situation may be more complex.

Determining your home’s value

Unless you and your ex plan to sell your home to a third party as part of your separation (which will very quickly tell you exactly what the place is worth), the first step is to get a clear idea of the property’s value.

Knowing the current market value of your home can let you know how much you owe your ex if you plan to buy them out. Or alternatively, it can clarify how much you are owed if your former spouse wants to buy out your stake in the family home.

A local real estate agent can provide a market appraisal. But the figure you’re quoted has no legal standing, and the agent may bump up the value if they believe a listing could be on the cards.

There are websites that offer free valuations. However, these may not be entirely accurate as they are based on past property sales, which may not reflect your home’s value.

The most accurate way to know what your home is worth is by arranging a formal valuation by a licensed valuer.

This will likely come at a cost but the upside is an independent and accurate valuation of your home.

Funding your home if it’s still under mortgage

If you’re keen to hold onto your home, you’ll need to work out how to fund it if the property is still under mortgage.

You can’t normally just take over the repayments on a mortgage if the loan is held in your former spouse or partner’s name. And frankly, this would involve a leap of faith by your ex as any missed repayments could impact their credit score.

So it may be necessary to apply for a loan of your own.

As your broker, we will walk you through the process. A key factor that lenders will consider is: will you be able to manage regular loan repayments?

If you are earning a wage or salary, or relying on Centrelink benefits, spousal maintenance or even child support payments to help meet the mortgage, you’ll likely be asked to provide evidence of this income.

Alternatively, you may be able to refinance your current home loan so that it is held in your name only.

There are a variety of options available – speaking to us at an early stage can help you select the option for your situation.

Separation is a time for support and guidance

Amid the raw emotions of a break-up, it’s important to have support and guidance from trusted professionals.

In some areas, a lawyer may be your first port of call. In others, such as finance, we’re here to help.

So if you’re facing the end of a relationship, get in touch today for a clearer idea of your home loan options. It could help you start the next phase of your life.

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 your 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.