Case study: How to renegotiate the mortgage during divorce

by: LEBC Group
  • 22/01/2016
  • 0
National financial planner and mortgage adviser LEBC Group explains how good financial planning and mortgage advice can unlock the divorcee stalemate for solicitors and their clients.

LEBC Group is doing more work with family lawyers and its clients as part of financial planning around divorce. Kay Ingram, director of individual savings and investments, explains how it helped two clients going through a divorce reach an agreement on a mortgage arrangement.

The clients

Tony, 50, and Anna Welbeck, 48, are divorcing; Anna is to remain in the marital home so Tony has agreed to move out. Proceedings have been amicable so far and it has been agreed that Tony is to receive £60,000 representing his share of the equity in the property. In addition to this he has £35,000 in savings.

The challenge

Tony is employed with a salary of £42,000 and Anna only became self-employed as a hairdresser last year with a net profit of just over £23,000. They approached their existing lender to discuss transferring the mortgage into her sole name with additional lending to release the required equity and a new mortgage for Tony. As Anna does not have a three-year trading history their lender would not consider removing Tony from the mortgage for the existing, modest balance of £30,000. The additional lending she required was a straight decline. They were happy to consider Tony for a new mortgage on his prospective purchase, providing he could demonstrate it was affordable to maintain both properties. They decided to look elsewhere.

The solution

Tony approached LEBC for advice to resolve the situation for the couple.

In order to move on, Anna would have to place the mortgage in her name and have the funds to pay Tony so that he could complete on his purchase. LEBC was able to remortgage Anna to a lender prepared to accept one year’s accounts with a projection for the coming year thus releasing Tony from the mortgage liability and leaving him in a position to purchase a new property.

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