Divorce is a major event that can have an impact upon all aspects of your life and more importantly it can alter your financial position which may leave you questioning yourself, can I afford a divorce?
Association between Finances and Divorce
Financial issues have always been a major factor in divorce proceedings and the dissolution of civil partnerships and they are the most common cause of arguments between couples. The current cost-of-living crisis is having a detrimental effect on couples who may be feeling stressed over their financial circumstances and it is impacting marriages more than ever, leaving couples to reconsider their plans and remaining in an unhappy relationship as they cannot afford to divorce.
If you are asking yourself – can I afford to divorce my spouse or want to know how divorce is going to impact you financially then it is crucial to know what your practical and legal options are.
We are here to support you and help navigate you throughout this process.
Financial Support
In the first instance, you should check whether you are entitled to support from the government as this can change once you are a single occupant.
Mortgages and Divorce
With the impact that the cost-of-living crisis is having financially on couples you might be worried that you may not be able to afford to live on one income stream alone so it is understandable that some couples reconsider getting divorced for this reason.
In 2022, mortgage rates began to increase which resulted in 56% of mortgage holders reporting that it will be difficult for them to pay off their mortgage and 1 in 10 reporting that if the rates continue to increase they will not be able to afford their mortgage repayments.
What are my mortgage options in a divorce?
If you are a mortgage holder and are choosing to divorce, deciding on what will happen to the family home becomes an urgent priority. For many couples, the family home is the most valuable matrimonial assets. Deciding on what you and your spouse will do with the family home can have significant impact on your future finances.
The way in which mortgages are dealt with usually fall in to three options but there are other creative ways to deal with the home to suit individual circumstances.
1. Buying out your spouse’s interest
This is when one partner chooses to buy the other spouse’s interest in the family home, simultaneous upon which their legal and beneficial interest is transferred to the paying spouse’s sole name. Generally, the most desirable option is for the spouse who is remaining in the property to remortgage the property into their sole name however you must seek specialist advice to ensure that your mortgage company will agree to this before you accept any proposals.
This may be a suitable choice if one spouse wishes to remain in the family home and is solely capable of covering the mortgage payments independently and they are in a position to afford to buy out their spouse’s interest in the home.
It is also important to consider if you can independently afford to keep up with the monthly maintenance costs of living in the family home. In some cases, couples can consider other financial assets such as pensions, savings or investments in order to be able to keep their family home, but it is always best to speak with a legal professional who will advise you on the best options to suit your best interests.
2. Sell the family home
This option is where the home will be sold and the proceeds of sale will be shared between you following discharge of the mortgage and payment of any costs or fees relating to the sale.
This may be the best (and only) option if you and your spouse cannot come to an agreement on who should stay in the house or if neither one of you can afford to buy out the interest of the other and take on the mortgage.
The starting point of dividing assets is on a 50/50 basis in divorce financial settlements, amongst other factors the process considers the welfare of any children of the marriage; length of marriage; ages of parties along with their health and income earning capacity to determine how equity should be split.
3. Keeping the home and the mortgage remains in joint names and to be sold at a later date.
This option is generally considered when a spouse does not have the means to get a mortgage or re-house themselves after divorce, this provides the opportunity for the children to remain living in the family home and once the children reach a certain age, the house can then be sold.
Online divorce
Couples apply for a divorce online using the government’s divorce portal.
The Court fee is £593 and there will be no legal fees if you choose to navigate this process without legal advice.
Importantly, finances are not considered nor resolved in this process. The resolution of financial issues generally run alongside an application for divorce.
You should not overlook the value of seeking legal advice in respect of your divorce, even if an agreement has been reached between you. Even once your divorce is complete, you will not be protected from future claims for financial relief by your ex-spouse unless and until there is a final binding financial order.
Support from a divorce solicitor
All divorces are unique, some cases require further legal advice in terms of dealing with more complex matters to ensure a fair outcome. Examples of higher conflict cases in divorce:
- Disputed Child Arrangements
- History of abuse (financial abuse, coercive control)
- Complex financial issues
We can also explore whether you may be entitled to make a claim for short-term or continued monetary support from your spouse which can help to lift the financial burden you may feel.
The cost of using a family law solicitor depends on the complexities of the case. A divorce solicitor will provide you with their expertise in the law relating to your case, so it is crucial to receive the advice from a specialist divorce solicitor to ensure you are protected and you are supported.