Buying a house during divorce and taking out a mortgage for it? We can well imagine. The atmosphere can change considerably as soon as you announce you want a divorce and wish to escape from a precarious situation.
During the divorce process, by the way, you can already buy a house. Alone, or together with your new partner, with or without your (future) ex-partner. In this article, we try to explain the rules of the game.
Is it easy? Not exactly, but it is if we do this together. When we talk about divorce, the situation for cohabitants with a relationship break-up is largely similar. You can also buy another home during the relationship break-up, even if the joint home has not yet been sold or is in your name, with or without a new partner.
It is wise to be clear about the financial implications of your divorce first. As soon as there is a draft divorce covenant, you can already take steps towards a new house to buy. Once the expected agreements are clear, and the procedure needs to be further formalised, you can take the next step with your agreements made. Want to know exactly what it takes to start house hunting? Then simply contact us. On the phone, by e-mail or during a short meeting, we can often help you get started and see if it clicks.
Conditions for buying a house during a divorce
Below are briefly the rules you need to comply with. The mortgage deed will state that the mortgage extends to satisfy all that the debtor (you and your possible new partner) will owe to the bank now and in the future. Other conditions that matter:
You are at the point in your divorce that you can reach agreements with your ex-partner, through, for example, a divorce covenant or settlement agreement;
If the covenant is final and it shows that you are no longer the owner, occupier or debtor of the current home after the divorce;
The former joint home may, of course, have already been sold.
You leave the home.
What should I consider during the divorce proceedings?
In any case, you can buy a new home and take out a mortgage during the divorce proceedings under conditions. However, the lender will ask for documents relating to your divorce. Further collateral may also be requested. In most cases, a preliminary consultation with us is desirable. This is because it is then also possible to clarify the amount you can independently apply for a mortgage.
The moment you start looking at houses and wish to proceed, you should act quickly. That is why we strongly recommend a preliminary consultation. This way, you will be well prepared to bid on a property.
Should you ask a mortgage consultant or financial planner from our office for advice, we will discuss with you the financial (im)possibilities of obtaining a mortgage. The factors that are important are what obligations arise after your marriage ends and the amount of your income and assets. Moreover, we will also review the agreements in the divorce covenant.
Sometimes, during the divorce proceedings, it is possible to make arrangements that will make buying a house easier. Therefore, consult a financial advisor in time to go through your specific case. This will prevent a lot of ambiguity during the buying process.
As long as you are still married, you should have your partner’s consent until you are actually divorced. Because of this, it is useful to record the consent to buy the new home in the covenant. Then this cannot be a point of discussion between you and your ex-partner later on, even if you do not buy a new home, this consent is already arranged. The consent is no longer required once the divorce petition is filed.
Moment of filing for divorce
Once you file the petition for divorce, all purchases thereafter belong to you privately. If you buy a car, it no longer falls into the ‘community’. If you win a lottery, the prize money no longer belongs to the community. This situation applies anyway if you are married in community of property.
If you buy a house before the divorce petition is filed, it will fall within the community of property. Even if this house and any mortgage are exclusively in your name.
If you cannot wait any longer to buy a house, you can also enter into a purchase agreement prior to the filing of the divorce petition. You can then agree with an additional contract that you will take over the house and obligations therewith after the formal divorce. This requires the consent of the seller and your (ex-)partner. We recommend this route if you really have no other option. In all other cases, it is cheaper and simpler to file for divorce first. You are then also not formally divorced yet, only then you can already apply for the mortgage.
Lenders will also be reluctant to grant a mortgage at this stage.
The previous situation is described for people married in community of property. If you have drawn up prenuptial agreements, it is advisable to have the arrangements made reviewed. It may make things simpler or more complex, depending on the agreements made with your ex-partner.
Housing costs of spousal support
Do the costs of living in the new house count towards the amount of spousal support? Housing costs do indeed affect partner alimony. Is there a concrete calculation method for this? Then, unfortunately, it becomes a bland answer: it depends on the situation.
When calculating spousal support, a basic amount of expenses a person has is taken into account. This is based on the so-called social assistance standard. If the living expenses, including those of a rental property, are higher than the social assistance amount, you can apply this excess for the calculation of spousal support.
Can I then frustrate my ex-partner by taking on a sky-high housing cost? You can, only the common practice is that you have to take into account a reasonable living burden. This takes into account the local housing market and your personal circumstances. So it is not if you are renting an expensive penthouse in the heart of a big city.
By buying a house, the lender will take future spousal support into account when assessing the mortgage. So there is a limit to the amount of living expenses anyway, even as far as the bank is concerned.
Taking low mortgage interest rates with you after divorce
At the moment you already have a house with a mortgage, you may have a favourable low mortgage interest rate. Taking this favourable low mortgage interest rate with you is therefore interesting for you. This aspect is also increasingly part of the divorce. After all, if you can borrow at a low interest rate for, say, a 20-year period at 1.5%, this is immediately of financial value. It can even make the difference in the maximum mortgage calculation whether you can buy the new home or not. This is because a lower interest rate will result in lower mortgage costs, allowing you to take out a higher mortgage.
Every lender has rules for taking this mortgage interest with you to a new home. Be sure to check with your bank or lender first to find out what these rules are and try to make proper arrangements during your divorce with your ex-partner.
How can we be of service
To start with, we can be your compass during the divorce and ensure that you can actually buy the property. Through our ausdauer, we can complete the process quickly and decisively for you. The whole process of mortgage application and purchase is also among the possibilities. Also because we are experienced in this area, we know better than anyone that you have more on your mind during a divorce. Calmly present your situation to us as well, sometimes there are wider possibilities to buy a house during your divorce. During an online introductory meeting, we often quickly arrive at a solution.
Using a quick scan, we can quickly identify financially whether you can buy a new house with a mortgage.
Pre-approval certificate mortgage
Get a pre-approval certificate from our advisors – increase your chances of making the winning bid free of charge
Our pre-approval certificate states that we have carefully considered your application. We have calculated your maximum mortgage for your situation against the criteria of a wide range of providers. This gives the vendor greater certainty and gives you a head start in the bidding process.
Tell us your story
Do you want to buy a house during your divorce proceedings? Then request a consultation, we will be happy to help you get on the right track quickly! This conversation can be scheduled online, by phone or in person at a time convenient for you. Also in the evenings.