The Family Home

Dividing one household into two

Dividing up resources after separation or divorce can have a big impact on the standard of living of all family members. The outcome may have considerable effect on where you might have to live in the future, whether you might have to go to work, what sort of property you can afford to live in, whether the children will need to move to a new school.

It is important that mediation reveals exactly what assets each party owns whether jointly or individually, and what debts each have jointly or individually.

It is sensible to be organised. You need to get into the habit of keeping bills and statements and all important documents of record. Invest in an expanding folder to keep the paperwork in good order. At some point you will have to provide this information to each other and the mediator.

Some families already work to a budget either informally or formally on their personal computers. For families who already do this then it will not be difficult for them to provide a budget forecast for their mediation negotiations. Other families, where budgeting is not such a priority, will be encouraged by their mediator and assisted to create a budget.

When moving into new accommodation proper provision will have to be made for the necessary costs. These are cost of the cost of buying the property, legal and removal costs, the cost of the deposit on a rented property and the cost of purchasing replacement furniture.

Whichever party is moving out will have to be in the position to calculate their future costs and provide a forecast for the other party when negotiating the financial settlement.

If there was only one car in the family then possibly a new car will have to purchased, or the family car sold and two cheaper models bought.

It may be that if the family is downsizing from a large house to two smaller homes, then there will be household contents to spare for sharing.

It is possible upon divorce for a tenancy to be transferred between spouses, either out of joint names into one name or if the tenant is one spouse he or she may ask the court to transfer the tenancy to the other spouse.

Transferring an owner occupied house will be something to be considered with the mediator. If there is a wish for the other spouse to buy another property and be released from the mortgage the mortgage lender may not agree if the remaining spouse has a low income. Any spouse who is in difficulty to getting the lender to agree to take them on as the sole borrower could ask a family member or friend to act as a guarantor. When there is a joint mortgage it is important that each party is informed by the lender that payments are being made regularly.

Some lenders are not flexible and will not regard maintenance payments, tax credits or other state related benefits as income available to pay a mortgage. There are exceptions however and some lenders do treat individual cases more sympathetically.

For parties where there is an endowment mortgage, it will be necessary to consider what to do about the endowment policy running alongside intended to pay off the original loan. Sometimes if the policy has not been in existence for very long, or is not performing particularly well it is decided to surrender it and put the cash to immediate use.

Likewise if a policy is coming to the end of its term, then it may be thought sensible not to surrender it, but to wait for it to mature even though it is no longer needed as security for a mortgage. The parties can come to an arrangement between themselves who is to pay the premiums until maturity.

The situation is more straightforward with a repayment mortgage. The lender is asked to provide an up to date statement of how much is owed and this is shared in mediation. It is not only that sum to be paid off on the sale of the property. Sometimes there are penalties payable for redeeming a loan early, particularly if it has been a fixed rate or discounted mortgage.

When parties decide in mediation that they will to sell a house it is important that they should agree about the choice of estate agent to use, what the preferred selling price will be and what the lowest selling price will be. They also need to agree which of them will be available to show round potential buyers and to let in estate agents and surveyors. It will be important to deal with any cosmetic repairs that are needed prior to putting the house on the market, and keeping it presentable at all times during the selling period.

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