Break-ups can be tough, and there are a lot of difficult decisions to be made when going through a divorce – not least, what to do with your home and any mortgage that comes with it. It's hard to know what to do when you feel like your life is in upheaval. So, we have put together a few things to help you answer the question. How To Finance Your Family Home After Divorce
The legal position is that any property division should be fair to you and your partner. This doesn’t necessarily mean 50/50 – there are many factors to consider and so it’s absolutely critical to get good legal advice.
Let’s take a look at one option – how to buy out your ex. How do you finance this move?
The first step to buying out your ex’s share of the family home is working out how much it’s worth, and how much is owed on it.
This isn’t about the price you bought it for – things are likely to have changed since then, plus you might have added improvements.
Here are a couple of options to value your home.
The most accurate valuation method is to get the help of a professional. A Certified Practising Valuer is a qualified person who’s been trained to perform a valuation of the property. They are accredited through the Australian Property Institute.
That option is a bit costly, so if you are on good terms with your ex, you might be able to agree on using comparable house prices to value your home. Look at what’s sold recently in the neighbourhood; just make sure it has the same number of bedrooms, bathrooms, and is of similar standards. It’s not the most accurate but if you can agree on a price, then you can move forward.
Having said that, it’s important to get professional legal advice before you agree to anything – don’t rely on instinct or advice from friends. Down the track, you don’t want to feel you’ve been gypped. If you engage legal professionals at a firm like CM Law, they’ll be on your side and work to get the best possible outcome for YOU.
The difference between the value of your home and the amount you still owe on it is the equity that you and your partner have established. For example, if your home is valued at $1,000,000 and you owe $400,000 on it, your equity is $600,000. You would need to pay your ex-partner $300,000 to buy out the share.
You’ll need to work with a mortgage broker or your current lender to refinance the mortgage. In the example above, you would want to refinance the mortgage and borrow $300,000 of the equity of the home in order to buy out your ex-spouse. Your new amount owed would be $700,000, and you would be solely responsible for the new mortgage payments.
Buying out your ex’s share of the mortgage might seem like the only way that you can stay in the home that you love, but it is a major financial decision that will impact your life in the long term. Here are some factors that you should consider before you move ahead with this decision.
Working out finances after a divorce is never easy, and determining who gets to live in your home is difficult. At CM Lawyers, we make a practice out of providing accurate, strong, and solid advice when it comes to property matters, especially during a break-up. We’re here to protect your interests. Contact us today for advice on Buying or Selling Your Home, or on the Divorce process, settlements or mediation. We are here to Help.