Mortgage and divorce: how do you arrange it?

A divorce is complicated enough as it is. When a joint mortgage is involved as well, it can quickly feel like one more problem on top of everything else. Yet with the right steps, it can be arranged well. In this blog, we set out your options.

In short: when you divorce with a joint mortgage, you essentially have three options: one of you buys out the other, you sell the home and divide the proceeds, or you temporarily remain co-owners. Do you have NHG (National Mortgage Guarantee)? Then, under certain conditions, you can get help with a residual debt, and the NHG relocation scheme gives you temporary breathing room if one of you moves out before the sale.

Your three options when you divorce

Option 1: Buying out

One of you takes over the entire mortgage and the home. The bank assesses this as a new application: can that one person carry the full mortgage based on his or her own income? That is not always a given, even if the mortgage has been running smoothly so far.

Option 2: Selling and dividing

You sell the home together and divide the surplus value (or the residual debt) according to the agreements you make together or through a mediator. This is often the clearest route, but it does take time during what is already an uncertain period.

Option 3: Both remaining owners for the time being

Sometimes selling or buying out right away is not feasible, for example because of the children or the housing market. In that case, you both remain owners and liable for the mortgage until there is a definitive solution. Please note: this means you both remain responsible if the other person can no longer pay the costs.

What if a residual debt looms?

Do you have a mortgage with the National Mortgage Guarantee (NHG)? Then, under certain conditions, NHG can help if the home sells for less than the remaining mortgage debt. This is not automatic, but it is a good reason to always check whether your mortgage is covered by NHG when you divorce.

The NHG relocation scheme

Is one of you moving to a new home before the sale? Then the NHG relocation scheme makes it possible to temporarily (usually for two years) deduct the mortgage interest on both homes for tax purposes. That gives you financial breathing room during the transition period. Are you going to adjust your mortgage after the divorce, for example because you are buying out your ex-partner? Then that follows the same process as a regular mortgage adjustment.

Frequently asked questions about divorce and your mortgage

Can I take over the mortgage on my own after a divorce?

You can, but the bank assesses this as a new application based on your own income. If you cannot carry the full mortgage on your own, buying out is not feasible and selling or temporarily remaining co-owners are the remaining options.

What happens to NHG in a divorce?

Your NHG mortgage simply continues if you buy out your partner, provided the partner taking over can carry the mortgage alone. If there is a residual debt after a sale, NHG can help under certain conditions.
Visit www.nhg.nl for more information.

How long can I deduct double mortgage interest if I move before the sale?

Usually two years, via the NHG relocation scheme. This allows you to temporarily deduct the interest on both homes for tax purposes until the old home has been sold.

Free mortgage consultation

No two divorces are the same, and the same goes for the mortgage that comes with it. Whether you buy out, sell, or remain co-owners for a while: it is wise to discuss your situation with an adviser in good time, so you are not caught off guard by the bank.

Would you like to know which route is best for your situation? Schedule a free mortgage consultation or get in touch if you have any questions. Being well prepared is half the battle!