How to Protect Your Equity During a Matrimonial Split

Unfortunately, matrimonial splits can come with many emotional and financial challenges, with one of the most significant concerns being the division of property. January is a month that sees many couples reassess their relationships, and sadly, separations often follow. The family home, often the largest asset in a relationship, can become a source of stress when deciding what happens to it after separation.  

During such transitions, understanding how to divide property equitably and retain as much financial stability as possible is crucial. In this blog, we’ll guide you through the process of protecting equity during matrimonial splits, offering practical mortgage advice solutions for those navigating this difficult situation. 

What happens to property during the matrimonial splits? 

When a marriage or partnership ends, one of the first financial decisions to make is what will happen to the property. The legal aspects of property division can vary based on jurisdiction, but here are some common steps: 

• Valuation of the property: 
  The property must be valued to determine its current market worth. This often includes the family home, investment properties, or any jointly owned real estate. 
• Equitable distribution: 
  In many cases, the equity from the property is split based on contributions to the home, ownership shares, and other considerations.  

Options for property division: 

Some options for property division include:  

• Buying out a partner:
  One partner may choose to buy out the other’s share of the property, which allows them to retain full ownership. This requires access to funds or the ability to release equity from the property.  
• Selling the property:
  If both parties agree, or if buying out the other party isn’t feasible, selling the property and splitting the proceeds is a common solution.   

Can you use equity to split the property? 

If one party wishes to retain ownership of the property, using equity through a remortgage can be a viable solution. By accessing the home’s equity, the individual can buy out the other party’s share, ensuring the property remains within the family while still providing a fair division of assets. 

How releasing equity works 

Releasing equity: 

One way to release equity is through a remortgage or second charge. This allows the homeowner to potentially borrow against the property’s value, freeing up cash to buy out their partner’s share or cover other expenses related to the split. This can be a helpful option for those who want to stay in the home without the need to sell. 

Remortgaging: 

If the property has appreciated in value, remortgaging could allow the homeowner to borrow additional funds, which can be used to buy out the partner. This way, one party can remain in the home and continue to live there without needing to sell or make any drastic changes.  

 

What to consider when splitting property 

When you’re deciding what to do with the property during a matrimonial split, there are several factors to consider:  

1. Financial implications of retaining or selling: 
   Staying in the property might seem appealing, but the financial implications require careful thought. If you’re considering a remortgage or a second charge, it’s important to understand the long-term costs, including higher monthly repayments if you take on additional debt. 
2. Tax implications: 
   Depending on your jurisdiction, selling or transferring ownership of the property may have tax implications. It’s important to factor in potential capital gains tax or other fees. 
3. Legal and financial advice: 
   In order to ensure both parties are treated fairly, don’t hesitate to get in touch with our mortgage brokers in Birmingham, Tamworth, and across the West Midlands. Consulting our independent mortgage advisors will help you understand your rights and the best options for managing the property’s equity.  

How RM Mortgage Solutions can help 

Dividing property during a matrimonial split can be challenging, but with the right advice, you can protect your financial future. Whether you’re looking to stay in the family home or ensure a fair division of assets, remortgaging or second charge can offer a practical solution.  

Here at RM Mortgage Solutions, we provide expert mortgage advice services to help you navigate this process with ease. Contact us today for tailored advice and support, ensuring your financial goals are met during this challenging time.