What to Do With Your Home After a Divorce?
What happens to the mortgage on your home?
Selling your home during a divorce can raise many questions. For example, many people wonder what the best order is for handling certain matters. Should you sell your home first, or wait until after the divorce? In principle, it doesn’t really matter which you do first. It’s up to you to decide whether to sell your home after the divorce or the other way around.
Another important question is what happens to the mortgage on your home. If you or your partner continues to live in the home, the person who remains in the home must take over the mortgage. The bank will then assess whether that person has sufficient funds to take on the ongoing payments. If the bank agrees, the other person must submit a request to the bank to be released from liability for the mortgage.
Thinking of selling your house?
What will you do with the home if you break up? It’s often unclear exactly what your options are. You can choose to sell the home in the event of a divorce, buy out your ex-partner and continue living in the home yourself, or keep the home as joint property. Below, we’ll explain the different options in more detail.
Option 1: Selling a Home After a Divorce
If neither of you chooses to continue living in the house, you can sell the property after the divorce. The value of the house will then be determined. After the sale and the execution of the notarial deed of sale, you will divide the sale price between yourselves. Keep in mind that certain costs will be deducted from the sale price, such as:
the balance of the mortgage loan,
reinvestment costs for the bank,
real estate agent fees,
fees for canceling the mortgage registration.
Did you use your own savings to purchase the home? If so, you are entitled to this amount. Even if the purchase of the home was financed on an unequal basis, this affects the distribution of the sale price.
Option 2: Buying out your ex-partner
Do you want to continue living in the house? If so, you can buy out your ex-partner. First, have the value of the house appraised. The amount of the mortgage loan is subtracted from the sale value. Don’t forget to include your own down payment. Divide the remaining amount—also known as the home’s equity—by two. Use the resulting amount to buy out your ex-partner.
Option 3: Keep the house undivided
You can also choose not to sell the house in the event of a divorce. We call this keeping the house in undivided ownership. This option can be useful if, for example, you want to keep the children close by, or if one of you temporarily has no income or runs a home-based business. In that case, be sure to make clear agreements about how long you’ll remain joint owners. In practice, this is usually a maximum of five years, but you can extend this period. Furthermore, you’ll remain jointly responsible for the costs associated with the home, such as taxes and maintenance. Clear agreements remain essential in this case.
Get your home appraised
Are you planning to sell your home after a divorce? If so, it’s important to first know the value of your home. This will give you a clear picture of what funds you have available and help you avoid any surprises. We have the knowledge and experience to provide an accurate appraisal of your home. Would you like to learn more about appraising your property? Feel free to contact us for a thorough appraisal.