Divorce: The long and winding road

Divorce is rarely a simple negotiation. Just look at the McCartneys, says Stephen Pritchard

Sir Paul McCartney and Heather Mills are just the latest high-profile couple heading for the divorce courts. And they are far from alone. This year, there will be some 167,000 divorces here, and the figure is expected to go on rising.

The emotional upheaval is only part of the picture: divorce also wreaks havoc with the finances of both parties. Unravelling joint finances takes time, and when it comes to the home, relying on a single salary might well mean a struggle to climb back on to the property ladder.

Couples who live together, who own property jointly but aren't married, can find themselves in an even worse position. Without recourse to the courts, reaching a fair settlement can be tough.

With divorce, the people who are worst hit are often those who have been together for some time. If one partner, usually the wife, has had a career break to bring up children, or given up work altogether, he or she might have taken a back seat in financial planning. "Often, one partner is more responsible for managing the finances, especially the main breadwinner," says Brian Murphy, lending manager at the Mortgage Advice Bureau. "It comes as a shock when they realise mortgage costs and the impact of changes in rates."

How does divorce affect your home?

For many divorcing couples, this is a real problem. Rising house prices mean that it can be hard to buy even two modest properties from the proceeds of selling the family home. The cost of transactions, especially higher stamp duty, also eat into the budget.

"People who are coming out of a relationship, especially those who have had a career break, may have lost touch with what it costs to service an average mortgage - now around £120,000 - says Murphy. A 25-year mortgage for that amount would cost round £550 a month, depending on the deal. And if one partner plans to stay in the family home, they will need to be able to cover the whole mortgage after the split.

Another problem is the time it takes to reach a divorce settlement. "If you have to wait for the divorce to finalise before moving on, that can take years," says Anna Bowes at the financial advisers AWD Chase de Vere. Couples who are splitting should talk about what to do with the property at an early stage, as this will make it easier to plan ahead.

What about the mortgage?

If one partner is staying in the family home, they have two options: to take over the existing mortgage, or arrange a new loan. If their income is sufficient to cover the mortgage and there is no need to raise new funds - for example, to give the partner who is leaving a share of the equity - then there will be few problems.

But for most couples, it's not that simple. If the partner staying in the property needs to remortgage, they will have to prove that their earnings are enough to support the new loan. This can be a struggle, especially if they are relying on maintenance payments to cover the costs. Many lenders only take 50 per cent of maintenance payments into account when assessing a mortgage. So, even if their ex pays the full cost of the loan, they could still be turned down by a lender.

A few lenders recognise that this is unfair. Yorkshire Building Society, for example, has a Fresh Start mortgage that takes 100 per cent of maintenance payments into account. It also offers an interest-only mortgage for the first six months.

When it comes to buying a new property, the newly single person is effectively starting from scratch on the property ladder. It is a good idea to check your credit record and speak to an independent financial adviser or mortgage broker about the options. In the short term, it may be simpler and cheaper to rent.

What if I am struggling financially?

It is critical to act quickly to stop debt mounting up. Approach your lender as soon as possible to see if they can arrange lower monthly payments, or a payment holiday. "The lender is bound to be sympathetic if they are kept informed of your situation," says Murphy. "They can switch you from an interest-only to a repayment mortgage, or arrange a payment break until you are back on your feet."

PROMOTED VIDEO
Arts and Entertainment
Stik on the crane as he completed the mural
art
News
Happy in his hat: Pharrell Williams
people
News
i100(More than you think)
News
Phyllis Dorothy James on stage during a reading of her book 'Death Comes to Pemberley' last year
peopleJohn Walsh pays tribute to PD James, who died today
News
peopleExclusive: Maryum and Hana Ali share their stories of the family man behind the boxing gloves
Arts and Entertainment
John Hurt will voice Prince Bolkonsky in Radio 4's War and Peace
radioRadio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Argyll Scott International: Service Desk Analyst

    £20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

    Argyll Scott International: 2x Service Desk Analyst

    £20000 - £22000 per annum: Argyll Scott International: Service Desk Analyst Re...

    Recruitment Genius: Senior Execution Trader

    £30000 - £250000 per annum: Recruitment Genius: A global Rolling Spot FX, Comm...

    Citifocus Ltd: ACA - Financial Reporting

    £Attractive Package: Citifocus Ltd: Chartered accountant (ACA or CPA), must be...

    Day In a Page

    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

    It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
    Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

    Sol Campbell cries foul at Labour's mansion tax

    The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
    Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

    Sarkozy returns

    The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
    Is the criticism of Ed Miliband a coded form of anti-Semitism?

    Is the criticism of Miliband anti-Semitic?

    Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
    Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

    Ouija boards are the must-have festive gift

    Simon Usborne explores the appeal - and mysteries - of a century-old parlour game
    There's a Good Girl exhibition: How female creatives are changing the way women are portrayed in advertising

    In pictures: There's a Good Girl exhibition

    The new exhibition reveals how female creatives are changing the way women are portrayed in advertising
    UK firm Biscuiteers is giving cookies a makeover - from advent calendars to doll's houses

    UK firm Biscuiteers is giving cookies a makeover

    It worked with cupcakes, doughnuts and macarons so no wonder someone decided to revamp the humble biscuit
    Can SkySaga capture the Minecraft magic?

    Can SkySaga capture the Minecraft magic?

    It's no surprise that the building game born in Sweden in 2009 and now played by millions, has imitators keen to construct their own mega money-spinner
    The King's School is way ahead of the pack when it comes to using the latest classroom technology

    Staying connected: The King's School

    The school in Cambridgeshire is ahead of the pack when it comes to using the latest classroom technology. Richard Garner discovers how teachers and pupils stay connected
    Christmas 2014: 23 best women's perfumes

    Festively fragrant: the best women's perfumes

    Give a loved one a luxe fragrance this year or treat yourself to a sensual pick-me-up
    Arsenal vs Borussia Dortmund: Alex Oxlade-Chamberlain celebrates century with trademark display of speed and intuition

    Arsenal vs Borussia Dortmund

    The Ox celebrates century with trademark display of speed and intuition
    Billy Joe Saunders vs Chris Eubank Jnr: When two worlds collide

    When two worlds collide

    Traveller Billy Joe Saunders did not have a pampered public-school upbringing - unlike Saturday’s opponent Chris Eubank Jnr
    Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

    Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

    Our partner charities help veterans on the brink – and get them back on their feet
    Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

    Putin’s far-right ambition

    Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
    Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

    Escape to Moominland

    What was the inspiration for Finland's most famous family?