GOING YOUR SEParate ways?
Everyone’s situation is different.
But one thing that most people going through separation and divorce have in common is a desire to get back on their feet financially as soon as possible and getting their own home.
That may mean buying out your former partner to stay in the family home, or perhaps purchasing your own new property with your divorce settlement.
That’s where we can help at A LOAN OF YOUR OWN.
We specialise in assisting people get a home loan after separation or divorce. It can be a complicated process, but we are in the business of turning the complicated into simple.
Once you are working on a separation agreement, you should get in contact with us to start the process of getting your new loan in place.
SOME THINGS YOU SHOULD KNOW ABOUT SEPARATION AND HOME LOANS
It is always a good idea to put in place a pre-approval or a conditional approval with a lender in advance of finalising your property settlement, so that you know exactly what loan amount you will be approved for going forwards.
You can use that approval either to buy your former partner out of the family home or to buy a new property for yourself.
It is really important that you keep your current home loan and other bills up to date until you finalise your property settlement, as any arrears (regardless of whose fault it was) may show up on your credit file, making it more difficult to get your next loan. If this does happen, call your bank immediately and they will discuss some options with you.
Payments of child support and some Centrelink payments (such as Family Tax Benefit) can be counted in the loan assessment for your new loan.
Some lenders will accept your income if you are employed in a new job on a permanent basis and can provide just one payslip.
Self-employed people and small business owners are also eligible for a new home loan.
If you have Consent Orders or a Financial Agreement in place and approved by the Court, you won’t have to pay any stamp duty to buy your former partner out of the family home.
A number of lenders can assist with the Family Home Guarantee Scheme which offers single parents the ability to buy a home with a 2% deposit.
A HELPFUL EXAMPLE
Let’s say that Caroline and John jointly own a property worth $800,000 which has a mortgage of $200,000 owing.
The value of the equity in the property is therefore $600,000, being the difference between what the property is worth and the amount owing on it.
Assume that Caroline and John have agreed to split the property 50:50 as part of their property settlement (although this may vary a little or a lot depending on the situation).
They could either:
1. Sell the property and split the proceeds – assuming a net sale price of $800,000, they would pay off the home loan of $200,000, and split the remaining proceeds of $600,000 with Caroline and John each taking $300,000 cash that they could put towards their next home
2. Buy the other partner out of the home – assuming that they agreed that the property was worth $800,000, a new loan of $500,000 would be needed to (1) refinance the existing home loan of $200,000, and (2) pay out the other partner their share of the equity of $300,000.
In practice, there may be adjustments for superannuation or other assets, but the above example illustrates in basic terms how the process operates.
HOME LOANS AFTER DIVORCE
We have access to home loans from around 10 specially selected panel lenders.
These panel lenders include several of the major banks, some smaller regional banks and credit unions, and a number of specialist non-bank lenders.
These lenders have been selected in order to suit a wide range of borrower circumstances. There are very few people that we cannot assist with a new loan.
We can help borrowers who are employed on a salary, as well as self-employed people and small business owners.
Different lenders have different lending policies, which is why we will work through a range of options to identify the most suitable loan for you and with the most attractive interest rate.
As a very rough guide, each $100,000 that you borrow will mean loan repayments of about $125 per week.
The establishment fees vary depending on the lender, but are generally less than $1,000.
There are no mortgage broking fees charged by us. We are paid by the lender that provides your loan.
ABOUT US
We operate as a franchise of LJ Hooker Home Loans, providing home loans with care, empathy, precision and expertise under the name of one of Australia’s most trusted real estate brands.
Our staff have been helping people with home loans since way back in 1970, and we have now assisted more than 1,000 borrowers with their lending requirements across a wide range of situations.
We are experts at getting tough loans approved. We are aware of which lenders have credit policies that can assist with your specific circumstances.
We also have extensive experience dealing with the Family Court system and are well versed in the various stages leading up to the finalisation of your property settlement.
We are happy to discuss your options with your solicitor if that assists you in putting together your property settlement.
We operate nationally and are available 7 days a week, including after hours.
We are members of the Finance Brokers Association of Australia (FBAA) and the Australian Financial Complaints Authority (AFCA) which is the body that deals with consumer complaints in relation to home loans.
Our services are completely free to you!
About Our Principal, David Tonuri
David has been assisting people with their finance needs since 1993. With initial training as an actuary, David has held senior level roles with organisations including ANZ Bank, National Australia Bank and the Bank of Queensland. He has also been the CEO of an ASX-listed technology company.
He holds the following qualifications:
- Master of Professional Accounting
- Bachelor of Economics (First Class Honours)
- Certificate IV in Finance & Mortgage Broking
About Alan Wilson
Alan recently completed 52 years of service with ANZ Bank in Queensland, Vanuatu, Papua New Guinea and as a franchisee and loan writer with ANZ Mobile Lending.
Alan has an Associate Diploma in Accounting and a Postgraduate Diploma in Business.
He is a former President of Maleny Rotary (QLD) and is a Commissioner for Declarations.
FAQ
I have used another mortgage broker in the past. Why should I now use you?
We specialise in situations like yours. Separation and divorce is a complex matter. Just as you have gone to a specialist family law solicitor, it makes sense to talk to an experienced mortgage broker who specialises in helping people at this stage of their lives.
Can’t I just get the bank to take my former partner off the loan?
No, unfortunately it’s not as simple as that. You can't just get your lender to change the name on the mortgage. In all cases, you will need to apply for a brand new loan, and show the lender that you can afford the new repayments on your own income. There is also a separate process to go through to have the property title moved from joint names to your sole name.
Isn’t it easier to just go to my existing bank to get a new loan?
Not necessarily. Your existing bank can only offer you solutions from that bank. You may end up with a much higher interest rate, or, worse still, be declined because you don’t meet their specific lending requirements for one reason or another. We can look at a wider range of options for you (including your existing bank).
How much will I be able to borrow?
That depends on your income from all sources, your living expenses, your other financial commitments, the size of your deposit, and a number of other factors – get in touch with us and we will be glad to run some initial borrowing capacity calculations for you.
What income can you count for a loan assessment?
Depending on the lender, we can generally include items such as child support and some Centrelink payments, as well as income earned from your job and/or your business and any rental income and dividends. Contact us for further details.
What will my loan repayments be?
As a very rough guide, each $100,000 that you borrow will mean loan repayments of about $125 per week. For example, if you are borrowing $500,000, then you can expect your weekly repayments to be around $625.
Can my parents help me out in getting a loan?
In many cases, they can, either by helping with a deposit or providing a parental guarantee. Talk to us about how that might work.
Do I need to engage a solicitor?
Generally speaking, yes. A specialist family law solicitor will be able to ensure that you have properly dealt with all of the aspects of separation and divorce.
How do we work out what the property is worth?
Depending on the situation, you may agree a figure between yourselves or otherwise engage a professional valuer to produce a formal valuation for you. Your lender will also obtain their own valuation before finalising a loan.
I have some missed or late payments from the time we were separating. Am I still eligible for a home loan?
You are likely to be eligible with several of our lenders who have additional flexibility around past account conduct.
My former partner owes me money. Can I stop paying my share of the mortgage?
That really isn’t advisable. If there are missed or late payments listed on your credit file, that may make it more difficult for you to get a loan in the future. If you are in financial difficulty, contact your existing bank immediately and they will discuss some options with you.
My former partner isn’t paying their share of the mortgage. What should I do?
First of all, talk to your solicitor and they will be able to advise you. If you are unable or unwilling to make the additional repayments yourself at least temporarily, contact your existing bank immediately and let them know what has happened and they will discuss some options with you.
My solicitor has advised me to stop paying the mortgage. Is that a good idea?
Without knowing the specifics of your situation, that generally isn't a good idea. Whilst your solicitor my have some valid reasons for that recommendation, they may not have fully considered the longer term implications of it being harder for you to get your next home loan because of the possible damage to your credit file.
What is a pre-approval?
A pre-approval is a formal commitment from a lender that you are approved for a new home loan, subject to things like finding a suitable property and finalising your property settlement. There is no charge for a pre-approval and it generally lasts for 3 months at a time.
Can I borrow extra funds to pay for the property settlement or sort out some other debts?
Yes, that's quite common. We can assist with loans to pay out your ex partner. We can add those additional amounts to your new home loan.