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A break up is often an emotional and drastic moment. Especially if there is also a joint home for sale that is mortgaged, in addition to emotions, there are also many financial questions at your disposal. Can either of them buy out the other and take over the mortgage or does the house have to be sold?
The first option is that neither of them can and/or wants to stay in the home. The property is then sold and both parties go their separate ways.
The second option is that either of them wants to stay in the home and will have to buy out the partner to do so. The question then is whether it is financially feasible for the remaining party to take over the mortgage and pay a lump sum to the departing party.
When you buy out, you pay the other person for his or her share of the excess value. You can pay this out of your own funds if you have one or by increasing the existing mortgage. Sometimes it is possible to keep existing interest agreements, which can be beneficial for your monthly payments. This does require good advice, so that you do not take unnecessary risks.
Do you want to stay in your home and buy out your partner? Then it will also be necessary to calculate whether or not the mortgage, with an increase in the purchase price, is financially viable on your income. When calculating a mortgage with the aim of dividing the home, you can often borrow more than in another situation. After all, in the event of a break up, different standards and calculation methods apply, which increase your chances of being able to continue living in the home.
Divorce often sounds complicated when it comes to the home, but it can also offer opportunities. For example, moving a low interest rate or adjusting the term to keep the costs affordable. At the same time, there are tax consequences to take into account, such as changes in the mortgage interest deduction. Timely advice helps you avoid surprises.
Even without marriage, a break in relationships has consequences for the home. Cohabitants with a home for sale often face the same choices as married people: take over the mortgage and buy out your partner or sell the home? The legal process differs, but from a financial point of view, the questions are almost the same.
Whatever the specific situation, clarity brings peace of mind. At Van Loon, we help you with expert advice and the next steps, so that you can make timely choices that suit your situation and future. At our offices in Dordrecht, Leiden and Dongen, among others, we are happy to give you personal advice. Not near one of our eleven locations? Then, of course, online contact is also an option!
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