Getting married and becoming homeowners is still the most traditional route taken by many couples today; however, for those facing a marriage breakdown, an understanding of divorce and mortgages in Ireland and the options available is crucial.
Regardless of the circumstances, any marriage split can be difficult. Having a joint mortgage adds a further complication to the mix – essentially, it’s a shared financial commitment between both parties. So, when a couple decides to go their separate ways, this can raise difficult questions for them, particularly around ownership, liability, and future affordability.
Having a good understanding of the legislation surrounding divorce and mortgages can be truly valuable if you’re going through a divorce and want to take informed, practical steps to protect yourself and your family. Here, we share everything you need to know about divorce and mortgages in Ireland today.
Divorce and mortgages in Ireland from a legal standpoint
Under the Family Law (Divorce) Act 1996, the treatment of assets, including the family home, must be approached fairly and in line with the needs of both parties, and more importantly, any children involved. For most couples, the family home is not just their largest financial asset. It also carries deep emotional value, especially for those with children who have been born and raised in the home. Given that the family home is so much more than just bricks and mortar, it is often the primary focus in divorce negotiations.
Another important piece of legislation is the Family Home Protection Act 1976, which prevents one spouse from selling, mortgaging, leasing or transferring the family or shared home without the agreement of the other spouse or civil partner. This is especially beneficial for spouses who are not named on the mortgage or the deeds of the family home.
In the majority of cases, both spouses are named on the mortgage, meaning they are jointly and equally liable for the loan. This remains true regardless of who continues to live in the property post-separation. It is a common misconception that leaving the home or signing a separation agreement removes responsibility for mortgage repayments—this is not the case unless the mortgage lender formally agrees to remove one party from the loan agreement.
It’s important to distinguish between home ownership and having mortgage liability, so let’s look at this in more detail.
Understanding ownership vs. mortgage liability
Having your name on a mortgage is not the same as being a homeowner. A person can remain liable for mortgage repayments even if they no longer hold a beneficial interest in the home. Likewise, a person may hold a share in the property but have no direct responsibility for the mortgage, depending on prior arrangements or court orders.
This is why legal advice in the early stages of a separation or divorce is crucial. A solicitor can help clarify:
- Who is listed as the legal and beneficial owner
- Who is responsible for repaying the mortgage
- Whether there are any legal agreements in place governing the property
- What options are available if one party wishes to buy out the other
What happens to the family home after divorce?
Every family situation is different, so it’s essential to explore the best outcome for your family situation. Here are several potential outcomes for the family home following a divorce or separation:
1. Sale of the property
This is the most straightforward solution where both parties agree to sell the property and divide any equity (or debt). However, this depends on market conditions and agreement on the division of proceeds. For example, if the property market has dropped since the time of purchase, the family home may now be worth substantially less. A better option might be to wait until the market has improved.
2. Transfer to one party
If one spouse wants to remain in the home, particularly where children are involved, they may seek to take over the mortgage and become the sole owner. This requires approval from the lender and sufficient income to take on the repayments independently.
3. Deferred sale or retained ownership
In some cases, couples agree to postpone the sale of the home until a later stage, such as when children reach a certain age. This arrangement can provide short-term stability, particularly for the children. However, it should not be just a verbal agreement – it must be carefully documented to avoid disputes arising further down the line.
4. Continued joint ownership
This outcome is certainly less common but may occur when neither party can afford to buy out the other or sell the property. It requires cooperation and clarity on financial responsibilities moving forward.
Key considerations for couples navigating divorce and mortgages in Ireland
- Communication with lenders: While you may not think it necessary, especially in the chaos of a marriage breakdown, mortgage lenders must be kept informed of changes in living arrangements. They may be open to restructuring loans or agreeing to a transfer of equity, but this typically requires both parties to be fully up to date on repayments.
- Court orders and property adjustment: Unfortunately, there are cases where an agreement cannot be reached. In such situations, the court may issue a property adjustment order. This order can transfer ownership or determine future rights to the home.
- Tax and stamp duty implications: Transfers of property between spouses as part of a divorce settlement can attract tax exemptions, but it’s essential to obtain both legal and financial advice to avoid any nasty surprises in the form of an unexpected tax liability.
- Joint mortgage, separate lives: Being tied to a mortgage with an ex-partner can create long-term complications, particularly if one party defaults. A person’s financial situation, particularly following a divorce, can change very quickly for several different reasons. Having legal and financial advice on hand as you finalise your divorce is key to managing this risk.
Divorce and mortgages in Ireland: Practical steps you can take
If you’re going through a separation or a divorce and you happen to have a joint mortgage, it’s important to follow these steps:
- Seek early legal advice to understand your rights
- Review your mortgage terms and speak to your lender
- Obtain a valuation of the property
- Consider future housing needs, especially for children
- Discuss options for restructuring or refinancing if one party wants to stay in the home
- Document all agreements clearly and legally
Common myths about divorce and mortgages in Ireland
Going through a divorce can be stressful and confusing, and what often adds further confusion is other voices sharing advice that may not be accurate. Here we debunk some of the most common misconceptions around this topic.
- “Leaving the house means giving up my rights.” False. Physical absence does not affect legal ownership unless formally changed.
- “The bank will automatically remove me from the mortgage.” Incorrect. Lenders require formal applications and financial reassessments before making changes to loan terms.
- “We can decide the property split without court involvement.” While amicable agreements are welcome, they should always be legally formalised and may still require court approval during divorce proceedings.
The best way you can be sure that you are receiving advice that is both accurate and based on genuine expertise or knowledge is by enlisting the services of an experienced family law solicitor. Speaking with a solicitor early in the process can help avoid unnecessary conflict, protect your interests, and provide clarity on your options.
Expert legal advice for going through a divorce, with or without a mortgage
At Summit Law, we understand the weight of uncertainty that comes with divorce, particularly when it involves the family home. Our experienced family law team can guide you through your options with compassion and clarity, ensuring your priorities are heard and your rights are protected.
Whatever stage you may be at in your separation or divorce, we’re here to help. Contact us today to speak with one of our family law solicitors; just taking that first step will put your mind at ease for the journey ahead.