A divorce is of course unpleasant enough. But if you have a house together with your ex-partner, then it’s also important that you arrange things around your mortgage. And consider carefully as to whether you’re going to sell the house or whether one of the two will continue to live there.
Do we have to sell our house?
You can, but it’s not necessary. If you do, the mortgage loan will be paid off after the sale. If there is surplus value, you will have to deal with the home equity reserve (sales proceeds minus current mortgage loan). You can use that surplus value to buy a new house. If you sell the property at a loss, you will end up with a residual debt.
Are you married in a community of property regime or after making a prenuptial agreement?
Do you have an owner-occupied house and were you married in a community of property regime? Then you are both half owner. That means that you both have a home acquisition debt (total debt incurred to purchase a house). Are you married having made a prenuptial agreement? Then you may have agreed on a different distribution. Will one of you continue to live in the house? Then that person has to buy half of the house from the other.
What happens to the mortgage if one person continues to live there?
If you get divorced, the mortgage lender has to release one of you from joint and several liability. The bank then usually assesses the situation as a new mortgage. For example, the bank can look again at the income of the person who continues to live in the house, and also at the value of the house.