The significance of maintenance payments
Applying for a mortgage when you separate from your partner is no different than for couples or individuals; you will need to get the same paperwork together (read our earlier article on what you’ll need here).
However, where things do vary are if there are children involved, and that applies whether you were married, civil partners or living together. If there are maintenance payments for the children, that will affect your income and what you will have to demonstrate to lenders, whether you are receiving the maintenance payments or making them, as both scenarios affect how much income you have available to make your mortgage payments.
Demonstrating maintenance payments
If you are relying on maintenance payments as part of your income to finance your mortgage, you need to be aware that not all mortgage lenders will consider your application, but there are plenty that will.However, you will have to prove not only that the payments are agreed, but also that they are being paid.For this reason, lenders will look to see a court order or an agreement between you and your former partner, but they will also want to see up to six months of bank statements demonstrating that you are receiving the payments regularly.If your separation is amicable and you have a mutual agreement with your former partner (rather than a court order), some lenders will be willing to accept just three months of bank statements.
If you are making maintenance payments to your former partner, lenders consider these along with your other regular outgoings when calculating how much they are willing to lend you.
Case study: Divorcing couple
As with every other aspect of separation, financing your future homes is always easier if you can manage things amicably between you.This was the case for one couple whom we helped recently, arranging mortgages for both the husband and the wife.
The wife was referred to us by her Financial Adviser.She was so happy with our services that she then suggested to her ex-husband that he should use us as well.We helped them apply for their mortgages at the same time.
The couple agreed that the children should live substantially with the wife, who would stay in the family home.The wife wanted an interest-only mortgage on the understanding that she would downsize when the children left home.The husband wanted a house big enough for the children to stay overnight.
Using their mutually agreed contract and bank statements, we were able to demonstrate their income and outgoings and secure mortgages for them that enabled them both to afford the homes they wanted to provide stability for their children.