Many partners are surprised to find that the ex who has moved out of the jointly owned property can stop making repayments. This can cause a major financial problem if they have been paying a share of the repayments, or if the other was making the full repayment every month. What if you’ve been the stay at home parent and you are not even earning an income?
If you fail to make payments on your mortgage the lending organisation can, and will, withdraw the loan and repossess your home to sell it to recover the principal amount. You’ll receive whatever is left after the loan amount and any costs have been covered. You’ll have to cover the legal fees of the very expensive lawyers that the banks have hired to assist them with the repossession and sale of your home. To add insult to injury your credit rating will suffer.
You can avoid this unpleasant and costly scenario if you make an appointment to see someone at your bank to explain the situation. It is not in the interests of the bank for you to default. They will help you to make a plan so that you can recover from the situation and start making repayments again. Banks have processes that can help you bridge the period until you have resolved the situation with your ex. Ensuring that you keep your home until you can sell your portion to your ex or buy their share. Alternatively, you can sell the house and split the proceeds between you.
A court would expect the person staying in the house to cover the expenditure, which of course would include the mortgage. If you cannot afford it, and if there is a big difference between your income and that of your spouse, this expectation could change.
It happens sometimes that at the time of separation one parent stays at home to look after the children. There may be a good reason for having to stay at home despite needing to pay the mortgage. An example would be where a child is disabled and requires constant care. If this is the situation and your partner is refusing to make mortgage payments, you could apply for urgent spousal maintenance. Spousal maintenance is awarded where one partner can afford to pay and the other, for health or other reasons, cannot go out to work. In deciding whether the partner has a need for, or is capable of, paying spousal maintenance the court must make reference to the means-tested Australian pension fund.
It can take a long time for child support to start coming through, and this can put the supporting parent into a difficult financial position. Apply for support as early as possible, and seek advice if the support is offered as payments against school fees or the mortgage.
Sometimes people who are unable to cover the mortgage on their own sell the property. if you decide to do this, the proceeds of the sale will go into a trust fund that your lawyers will hold until the final settlement of the divorce. At which time they will split the money according to the settlement agreement. If your ex has made repayments against the mortgage after leaving the home, the repayments will be included in the calculation when working out the settlement amount.