What happens to a mortgage after a divorce?

Some of the most common questions we receive from clients who hire us as lawyers specializing in family law are related to the future of their marital home. In this regard, it is essential to understand that allocation of use of the home within the framework of the divorce is completely independent from mortgage loans being paid.
 
If the terms of the mortgage signed to purchase the home entail joint payment by both spouses, this doesn’t change due to the dissolution of the marriage, even if exclusive use of the property is granted to one of the spouses. Even though the other spouse is not going to reside in the home, a priori they must keep making payments to the bank as usual.
 
Likewise, mortgagor status is also independent from the home ownership regime. Be it a community property or a condominium, regardless of the measures adopted, both spouses will remain debtors to the financial institution that granted the loan, and thus have to answer to it with their assets.
 
Thus, if common solutions such as one of the owners selling or transferring their share to the other are chosen, it will be necessary to go to the bank in order to separately modify the ownership of the mortgage, which is known as a novation. This is not a mere formality, and it is likely that it will be necessary to renegotiate the loan conditions since financial institutions feel that payment guarantees diminish when a mortgage passes from two debtors to just one. The existence of guarantors associated with the party being removed from the mortgage is another potential obstacle to overcome.
 
Of course, another way out of the situation would be to sell the property to a third party in order to then try to cancel the mortgage with the income earned, or at least reduce the pending payments as much as possible, which would remain a joint responsibility.
 
At ICN LEGAL, you’ll find a team of lawyers specializing in family law who can be consulted with confidence regarding the specific details affecting your case. Given the complexities that divorce always entails, we will provide you with detailed legal assistance in order to resolve each aspect thoroughly and efficiently.
 

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