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Home Security Part2 |
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Are you a man divorcee, wondering whether you are in a position to buy a new home? Here are a few 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 men some will be applicable to women and are useful for both parties during separation to be aware of and understand.
2nd Mortgages
If it has been agreed that your ex-partner and children are to remain in the former marital home but your ex is unable to take on the mortgage alone, you may have no choice but to remain a party to that existing mortgage. Even if you are not responsible for making the mortgage payments lenders will still treat it as your financial commitment. When purchasing your new home it will considered as your ‘2nd home’ and the existing mortgage is likely significantly reduce the amount you are able to borrow.
Child Maintenance
Like Credit Card debt or Personal Loans, Child Maintenance is treated as any other commitment by Mortgage Lenders and the amount you pay will affect your borrowing power. It is irrelevant whether you have been paying it for one month or 5 years, mortgage lenders will still take it into consideration when assessing your ability to afford any new mortgage repayments. If you and your ex-spouse are unable to agree on a maintenance payment, finding out how paying different amounts of maintenance will affect both yours and their ability to obtain a mortgage may help make the decision for you.
Lending into Retirement
It is often considered that as men are more likely to have accumulated the most retirement savings (no breaks in employment due to child birth or reduced working hours) they will be able to take out a mortgage that will remain affordable during retirement. Although some mortgage lenders are happy to lend into a person’s retirement the process can be complicated and certain proofs will be required. It is best to make certain that this is an option and make detailed enquiries with mortgage lenders to be sure.
Joint Debt
As the main earner it is common to see the man taking on the majority of the joint debt post divorce. Although he may have the financial means to repay it over time, in the short term it could seriously affect the amount of lending available to him. It is always best to contact Mortgage Lenders prior to making any financial agreement with your ex-spouse.
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 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: GRANITARCHITECTS
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