John Lewis explains for us
The breakdown of a relationship can be a stressful and emotional time. It is especially challenging if you have no previous experience in family law. Lindbloms Lawyers’ team of experienced family and divorce lawyers are here to help.
In short, if your property is in ‘joint names’, that is both you and your partner are on the Title Deed, then you are both legally responsible for the payment of the mortgage. If the mortgage repayments are not made and the mortgage is defaulted, then the lending institution can take possession of the property and sell it in order to discharge the debt.
Following separation, you will generally find yourself in one of the following predicaments:
- You have moved out of the house that has the mortgage over it; or
- You have remained living in the house that has a mortgage over it, whilst your partner has moved out.
If the mortgage repayments are not made and the mortgage is defaulted, then the lending institution can take possession of the property and sell it in order to discharge the debt.
What options do I have if my partner decides not to make mortgage payments?
- Contact your lending institution and update them of your current situation. Whilst the lender will still require mortgage payments to be made, it is important to let them know so they are aware why payments have not been made. You may find that the lender is prepared to accept a compromise agreement about the amount of repayments for a period of time, until final division of your property through the Family Court. It is extremely important to be aware that any failure to meet your mortgage repayments could affect your credit rating and potentially impact on your ability to borrow money in the future.
- You and your partner can agree to sell the property. This will ensure the mortgage is paid. The balance of the proceeds of the sale can be held in trust until you and your partner reach a final agreement.
- In some circumstances, you may be able to obtain a Court Order for spousal maintenance to force your spouse to contribute to the ongoing mortgage repayments. The lending institution is only interested in having the mortgage debt serviced, and where payments are in default, failing an alternate agreement, the property will be sold to discharge the debt. Therefore it is important to keep making payments to the mortgage, as it may enhance your property entitlements in the Family Court – particularly if the repayments are seen as post separation contributions made by you. For example, if you have moved out and yet continue to pay the mortgage, this can be a beneficial consideration in your negotiations regarding a property settlement.
Contact our experienced family lawyers to discuss your matter in further detail. Seeking advice early in a separation can help safeguard your financial entitlements.