We are regularly asked about what happens when a couple divorces and they own a house in joint names, but the person who will remain in the house after the divorce cannot afford to continue paying the existing mortgage on their own. This can be a major problem that most families who split up face. Clients wonder how to stretch a family income which originally provided for one household, but now has to provide for two? Clients also worry that they will be forced to sell their home because they are not able to take on the mortgage.
When looking at the financial issues, the court will want to know whether or not it is financially viable for the mortgage to continue to be paid. If not, then it will almost certainly require the property to be sold, otherwise the mortgage will fall into arrears and the property will be repossessed.
Whether or not it is financially viable depends on what money is available. The court will first look at your income and deduct your reasonable income needs (part of which will include the mortgage payments if you are to remain in the property). The court will then look at your spouse’s income and deduct their reasonable income needs (part of which will include their own accommodation costs and child support obligation if applicable).
If your income needs exceed your income i.e. you’re in deficit each month and your spouse’s has a surplus, the court could potentially order that they pay this over to you to help reduce or clear your deficit. This is known as spousal maintenance or spousal periodical payments. However, when incomes are tight, and this exercise is carried out, both the husband and the wife often show a deficit. In which, case there will be no additional money left over to pay spousal periodical payments.
If it is financially viable to keep the house on, the court may think your existing home exceeds what you (and any children who will be living there) reasonably need. In which case, it might order the property to be sold so that you can buy a smaller one with a reduced mortgage.
It is usually helpful to look into any benefits that are available to you to maximise your own income. You may also have to consider your working arrangements – taking a job if you are currently not working, or increasing your hours if you work part time, if this fits in with your child care commitments.