Remortgaging to pay off ex-spouse

Posted on 10 October 2016 by Martyn McGrath

I am going through a divorce and wish to buy my wife's equity in the house by a lump sum and instalments over two years. It is an interest only mortgage and I would not be able to pay capital and the instalments to my wife. If she remains on the mortgage, will this be an issue when she comes to apply for a mortgage? I intend to repay capital after settlement with my wife.

The proposal you have put forward is an interesting one and one that lenders would tend to not be happy with. Subject to meeting criteria, there's no reason why you wouldn't be able to remortgage your property, take your wife off the mortgage, and pay her a lump sum. However as lenders are not keen to pre-agree further releases of capital up front, the instalments that you refer to would have to be applied for separately and at each time they were required. This means that your circumstances will be re-assessed on each occasion, however as long as there's no negative changes, and you still meet their criteria, there's no reason to think that they wouldn't release the funds to you.

This is a slightly more complex case than the normal, and I would recommend that you speak to one of our consultants. If you would like to arrange a time for one of them to contact you, please let me know.

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.


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