The cost of living crisis has continued to affect both families and individuals on a daily basis. With increased food, energy and property costs, many people have found themselves forced to cut back on their spending. 

But the cost of living crisis isn’t simply limited to the day-to-day running of households. For couples who are experiencing marital problems, and have either decided upon or contemplated a divorce, decisions about the future are more financially difficult than ever.

NB: This blog does not constitute legal advice and is for information purposes only. Before making any decisions in relation to your property or your finances during your divorce or separation, please seek independent legal advice. 

What impact is the cost of living crisis having on couples? 

As mortgage rates continue to rise, couples who might otherwise have already separated may continue living together, with combined incomes and shared resources. They may be worried about how they’ll cope financially as a single person, and whether they’ll be able to afford a mortgage on their own. For couples who have children, these feelings may be even more heightened. 

Given the very real concerns, what issues are separating couples facing in the current economic climate? 

The family home

For people wishing to remain in the family home, increasing mortgage rates are a real concern. As many fixed rate deals come to an end, monthly mortgage payments could become too expensive to manage alone. This may limit the prospect of keeping the property or deferring the sale until a later date. 

Whilst remortgaging could be a consideration, this requires the consent of both parties which is not always guaranteed. As such, increasing monthly payments on a variable rate could be a fairly powerful tool when negotiating all aspects of a financial settlement.

Delaying a divorce or separation 

In the face of rising costs, some couples may decide to delay starting divorce proceedings. This might be an attractive option for those couples who still have plenty of time left on a favourable fixed rate mortgage. However, consideration should be given to the impact this can have on each individual’s emotional wellbeing, particularly if the situation is acrimonious. 

Some couples might continue living together during their divorce to avoid the cost of running two households. Whilst this is an option, there are a number of repercussions that need to be considered. You can read more about this here. 

Keeping the existing mortgage 

Some lenders allow their customers to retain their current mortgage rate by transferring it to a new property. Some even allow the parties to share that benefit. This is known as ‘porting’ the mortgage, and in some situations can save a significant amount of money. 

It’s important to seek robust advice from a mortgage specialist here, as they’ll be able to advise you about what your lender will allow. In the event that you and your spouse cannot agree on who benefits from porting the mortgage, then you’ll need to apply to the court for a decision to be made. 

How will the mortgage be paid during the divorce?

Couples who are now on a variable rate mortgage could find themselves with increased monthly payments. If the mortgage is in joint names, each spouse is legally obligated to pay it. This applies even if they’re no longer living there.

It’s advisable for couples in this situation to seek legal advice at the earliest opportunity. This will enable them to negotiate an agreement about how the mortgage will be paid until the property is sold, and negotiate what will happen to any equity once the divorce is finalised. 

If you’re worried about being able to meet your mortgage payments, it’s very important to speak with your mortgage lender. 

When it comes to divorce or separation, the cost of living crisis has made what can be an already stressful situation even more difficult. However, by seeking expert legal advice early on, you can have peace of mind that you’re making the right decisions for you and your future. 

If you need to speak to a member of the team, all you need to do is get in touch.