Mothers who work part time or work in a low paid job to be able to fit their job around general child care, will often struggle after divorce to be eligible for any reasonable sized mortgage from a bank or building society. .
Even if your partner has left the marital home and you have been paying the mortgage yourself, don’t assume that the lender will automatically transfer the mortgage into your name.
All lenders will deal with this request as a new enquiry and you will have to go through an underwriting process, and tick all the boxes that a new borrower would have to tick.
Proof that mortgage payments have been made out of your income will not ensure that you will pass the lenders affordability test when only your income is used rather than yours and your partner’s.
You may know from your cashflow that you can afford to pay the mortgage, particularly if you have been paying it yourself for some time. But that will not ensure the lender agrees you can afford to pay it.
The bank or building society will use your income as a guide to how much they will lend. Some lenders will include maintenance payments, child benefit, working tax credits etc. But not all lenders will include these.
If the lender does take into account maintenance payments it is likely they will want this evidence by a court order.
Do not assume that because you’re currently paying interest only on your mortgage now that the lender will automatically allow you to continue with an interest only mortgage if the account is transferred to your sole name.
Lenders requirements in relation to interest only have changed significantly over the recent years. Any change in the mortgage account will constitute a new application and will be subject to the current criteria. A lender who allowed an interest only mortgage two years ago when you took out your mortgage may no longer allow it.
Some lenders will allow interest only to be paid but will calculate your mortgage affordability based on the amount you would repay on a capital repayment mortgage.
Before you agree the financial settlement do make sure you have spoken to a mortgage adviser if you plan to have a mortgage after the divorce. Logic says that if you are paying the mortgage yourself at the minute the lender will automatically transfer the mortgage into your name.
But it’s not as easy as that.
Take advice early before finalising the settlement so you can be sure exactly what your mortgage capability is.