Refinancing After Divorce

Divorce is a difficult experience for everyone involved, and the details of sorting out property can be overwhelming.  One of the items you will likely have to deal with is the refinancing of your home if both people were listed on the mortgage.  How and when this happens will depend on the terms of your divorce.

Refinancing to Remove an Owner

In the event that one of you will retain ownership of the home, it will be refinanced to a new loan that is solely in that person’s name, removing the other party’s liability for the mortgage and property.

This can usually be done in a straightforward manner.  The new sole owner will take out a loan and pay off the previous loan in the process.  In this case, the closing costs will be the responsibility of the new sole owner.  Once the refinance is complete, the other party will no longer be responsible legally for the mortgage or the home itself.

If there is any equity in the property, and cash is taken out during the refinance, the courts will determine how this is distributed during the divorce proceedings.  It may be split or belong to one party or the other.

Divorce and Credit

In some cases, divorce can be hard on a person’s credit.  This is especially true if there were many debts incurred during the marriage or if a bankruptcy becomes part of the proceedings.  A former spouse’s debts can continue to damage your credit for a while after the divorce is final.

This can make the refinance a little more difficult since it will affect credit and thus interest rates.  Talk to your mortgage broker regarding the potential impact of your divorce on your credit and determine the best way to approach the refinance.

Who Pays the Mortgage?

If child support or alimony is involved in the divorce, one party may continue paying part or the entire mortgage even though they no longer live in the house.  This doesn’t mean that it can’t be refinanced out of that person’s name.

This matter should be determined as part of the divorce proceedings, and the home refinanced in accordance with the judge’s determination.  Many mortgage brokers are experts in dealing with divorces, refinances, and their repercussions.

What about stamp duty?

Often you won’t have to pay stamp duty when buying out the property share of your ex-spouse, whether it is a single family home or investment property. Stamp duty can be a complex issue so please ensure you speak to Landmark Settlements if you have any questions.

I have many clients who have gone through this process. It can be an emotional time and it is best to speak to an expert on ensuring you have the best way going forward especially with your mortgage.

Soraya has a passion for helping customers find the loan that suits their needs. Soraya specializes in the needs of first homebuyers, property investors and clients wishing to borrow in their self-managed super fund.

Soraya is motivated to help her clients be “life rich” in all stages of their life. No matter their goal, her clients say that she works tiredly to help them achieve it. That’s why Soraya’s clients are clients for life.

Contact Soraya Francke today on 0418 666 046.

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Refinancing After Divorce