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Buying A Home Post Divorce. Part1 |
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Are you a women divorcee wondering whether you are in a position to buy a new home? Here are a few helpful tips and pointers you should be aware of.
Often the financial effects of divorce are very different for men and women. Although the following criteria are aimed at women some will be applicable to men and are useful for both parties during separation to be aware of and understand.
Low Income vs. High Benefits
Mortgage Lenders are more likely to decline an applicant if their income is predominantly made up of State Benefits or Maintenance. This is because Mortgage Lenders prefer to lend against ‘Earned Income’. Part-time working mums are often the most affected by this. Once the ex-partner has moved out of the family home benefits such as Working Tax Credits and Child Maintenance may increase and once the divorce is finalised Spousal Maintenance may also become a factor. As a general rule it is preferable for least 50% of income to derive from salary.
Acceptable Forms of Income
As mentioned above not all forms of income will help you get a mortgage. For example, if your children are nearing the age of 13, 14 or 15, mortgage lenders become reluctant to use any income associated with them. Child Benefit, Child Tax Credits and Child Maintenance all fall within this category. Furthermore, Mortgage Lenders will only take into account Child or Spousal Maintenance payable from an ex-spouse if it has been Court Ordered and has been payable on time, each month for 6 months and Bank Statements will be required. Don’t let unreliable ex-partners ruin your mortgage plans!
Adult Children
Historically, if your children still lived with you but were 18 or over and in employment they were deemed as no longer financial dependent, however, with the average age of first time buyers now being in their 30’s and renting being so expensive it’s safe to say that many children may be hanging around for a while. Some lenders will now treat your adult children as dependents and deduct income from you to account for this. Any housekeeping that your children may pay will not be taken into consideration either.
Credit Record
Divorce can be messy and sometimes paying the bills on time is the last thing on your mind. Whether this is done intentionally or accidentally mortgage lenders do not take any form of arrears, missed or late payments on existing credit agreements lightly. If you haven’t been able to keep on top of things and mortgage payments have been missed you will need to wait at least 12 months before applying for any new mortgage, making sure all payments are kept up-to-date in the meantime. Late or missed payments on any other debt, loans or credit cards are not as critical but you should check with the lender before making any form of application. County Court Judgements ( CCJs) or Individual Voluntary Arrangements (IVA’s) will seriously reduce your chances of your obtaining a mortgage. The good news is that a small number of Mortgage Lenders have recently changed their lending criteria and they will want you to wait only 2 years from the date your CCJ or IVA was settled but you must ensure that your credit record is kept in excellent condition during this time.
In all cases it is best to get your capacity to mortgage assessed prior to divorce proceedings being finalised. This will ensure that everyone involved understands their mortgage position so the best possible outcome can be agreed upon.
Written by Natasha Phillips. Mortgage Capacity Expert. For more information visit www.simpsonfs.co.uk
PHOTO CREDIT: GRANITARCHITECTS
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