My partner and I are separating – should we keep our £300,000 joint mortgage? DAVID HOLLINGWORTH responds

We have a two-year fixed rate mortgage that ends next June.

My partner and I separated but kept making mortgage payments. We pay 50/50.

We have £300,000 left on our mortgage and about 25 years. He still wants us to keep the mortgage together to get better rates and thinks changing anything will only hurt our mortgage.

What are my options? What should I keep in mind when we are looking to remortgage next year?

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David Hollingworth replies: It sounds like you still have a good relationship with your ex, which should make any decision about the best next step easier to discuss.

It is not clear if you both remained in the property after the separation or if only one of you left and the other now lives alone in the property but continue to manage the mortgage between yourselves.

The latter is perhaps the most likely scenario, but your living situation is likely to have a big influence on how you decide to approach the current property.

The biggest question you’ll both face going forward is how the joint mortgage might affect your plans for the future.

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Future impact

Assuming your ex now lives somewhere else, they may want to buy their own home at some point.

There will be an impact on your ability to take out a new mortgage on a new home. Any lender will need to be able to demonstrate that the mortgage will be affordable, so they will not only take into account income but also expenses.

That will include the existing commitment on the current mortgage. Joint borrowers are jointly and severally liable, so the lender will take the entire mortgage into account in its affordability calculation.

They will need enough income to cover both mortgages and, if not, their ability to purchase a property could be severely limited.

Purchasing a new property could also require your partner to withdraw equity from the current property to put towards the new purchase.

If you wanted to stay in the current property, you would ultimately have to buy out your ex-partner.

That could mean taking on the mortgage plus any additional loans needed to cover your ex-partner’s interest in the property. You would also need legal advice.

Transfer the capital

Lenders may allow you to transfer equity and take one name off the mortgage, but they will need to make sure the remaining borrower can repay the mortgage in their own right.

If your income alone is not enough to cover the mortgage and any additional loans, the lender will not release the borrower.

That could mean it would be necessary to sell the property and split the equity for you to go your separate ways.

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Your relationship is good at the moment, but would the desire to continue the mortgage in common names persist if you meet another partner?

If one of you were to stop paying the mortgage, it would have an impact on both of your credit files. It is worth considering and discussing these hypothetical scenarios before setting a new rate.

shopping

The income level between you could also play a role in deciding which mortgage options are available to you.

Your existing lender will certainly offer options for you to switch and should not require a full affordability check as long as no material changes are made to the current mortgage.

However, that may not be the best deal on the market. Seeking a new mortgage deal would require a new lender to conduct an affordability assessment.

With both incomes, that could give you the opportunity to reach an agreement elsewhere, subject to any additional expenses that need to be taken into account, for example, if your ex-partner is paying rent or if either of you has taken out additional credit since you got married. took over the existing mortgage.

If you go ahead and decide to have the two of you stay together on the mortgage, think about how long you want to lock it in or whether a shorter-term product or no-penalty deal could give you valuable flexibility.