A divorce can be an incredibly difficult and emotionally stressful process for anyone to go through. When you have to start to explore how you will unravel and separate your finances, this can be made even more difficult. This is particularly true if you own an investment property or your own family home together, as it means that you need to make some major decisions regarding buying out your ex-partner, selling to your ex-partner, or putting the property on the market and splitting the sale proceeds.

This week we’re exploring the key options for those going through a divorce when it comes to your family home or investment property. Given the sensitivity and stress of such an event, we would certainly suggest seeking professional legal advice.

There are three key options when it comes to property and divorce, which are:

1. Selling the property and splitting the proceeds
2. Refinancing and buying out your ex-partner
3. Refinancing and selling to your ex-partner

Let’s explore each of these in more detail:

1. Option 1 – Selling the property and splitting the proceeds

This is often easiest for an investment property, but can also be a suitable scenario whereby both parties decide to move out of the primary residence and put it on the market. The upside of such a strategy is that both parties can draw a line in the sand and start to build their wealth from there.

There are a number of key items to consider if you decide to sell your property including; agent fees, capital gains tax, transfer fees, mortgage discharge fees, and other costs involved in liquidating the property. It’s important to seek legal advice here to ensure that both parties agree on the sale price in addition to the split of the profits that will result from the sale of the property.

2. Option 2 – Refinancing and buying out your ex-partner

In some instances, you may want to retain the property, which could be the case particularly if it’s your main residence and you wish to remain in the property. In this instance, if both parties are listed on the mortgage, then it’s not as simple as a transfer of the loan, but instead is a refinance which would effectively transfer the mortgage to be in your name only.

It’s important in this instance that if you are looking to refinance that you speak to a mortgage broker before agreeing to anything and ensure that you can in fact refinance the mortgage to yourself and manage your repayments. This would include ensuring that you have a steady income stream and a strong financial position to ensure that the lender will allow you to refinance the loan.

3. Option 3 – Refinancing and selling to your partner

Similar to option 2, this process involves a refinance of the mortgage, however, in this instance it would be your ex-partner that would need to take care of the refinancing process. In this instance, it’s likely that you would be in receipt of a lump sum from the sale proceeds.

Again, it’s important to ensure that you seek professional legal advice and that you’re receiving the right amount when it comes to your sales proceeds.

If you’re going through a divorce or separation with your partner, or you’re starting to think about your options, be sure to reach out to the professionals and ensure that you put yourself in the best possible position to rebuild your wealth. If you have any questions at all, please feel free to reach out to our team at Loansuite.

Ally Home Loans Pty Ltd is your ally in finance for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.

Book an obligation-free, complimentary consultation here today.

Ally Home Loans Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.