Posted on 18 January 2011 by Ben
After 13 years of marriage my wife and I are divorcing. We live in a big 2 bed flat with a joint mortgage of 222k. My question is we both cant really afford to either buy the other out or afford to buy a new flat again. Also our credit ratings are such i doubt we could get another mortgage. We have an idea as to split our 2 bed flat into two studio flats. Can we just split the deeds into two and seperate the mortgage 50:50?
This is a very creative solution to your situation and whether or not you can make it work is going to depend on the value of 2 studio flats compared to the value of one 2 bed flat. Depending on location and demand, it is possible that the total value of 2 studio flats will be less than it is currently. You will probably need to get planning permission for the conversion and have proper Architects plans available before a valuer could give you an accurate idea of their worth. However, you should be able to get a ballpark figure to let you judge whether or not it is worth pursuing in the first place.
Your existing mortgage Lender will want to have their mortgage repaid and this will necessitate you arranging a new mortgage on each studio flat. Whether or not you can do this will depend on you individual circumstances and again on the value of the new flats. I suggest that you speak to your current Lender to find out what their requirements would be and if any Early Repayment charges apply to your existing mortgage. It may be that they are reluctant to help and you will need to consider moving to new Lenders.
When looking at new mortgage products don't be taken in by the offer of free legals on many remortgage deals. These will not cover the cost of splitting the title and you may be better off taking a cheaper rate without an incentive or by taking a product which offers either a cashback or contribution to legal fees, usually around £300. A good independent mortgage broker will have access to the whole mortgage market and be able to advise you which would be best in your circumstances.
Finally, I recommend that you both take independent legal advice regarding your proposal and separation.
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
We recommend you seek professional advice with regard to any of these topics where appropriate.